IMPORTANT POINT
A registered taxpayer is entitled to rectify errors in GST returns and claim refunds for excess payments, as supported by relevant circulars and judicial interpretation.

JUDGMENT :

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. Uchit Sheth for the petitioner and learned Senior Standing Counsel Ms. Hetvi Sancheti for the respondent.

2. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Hetvi Sancheti for

the respondent waives service of notice of rule.

3. Having regard to the controversy arising in this petition in narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.

4. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs:

“A. This Hon’ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other writ or order directing the respondents to forthwith enable rectification of error in the returns in Form GSTR-3B filed for the months of January and March 2023 in accordance with Section 39(9) of the GST Acts;

B. This Hon’ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other writ or order directing the respondents to forthwith grant refund of the excess payment of tax that the petitioner was forced to pay a result of non-availability of functionality to rectify any error or omission in the returns filed for the months of January and March 2023 along with statutory interest on such refund;

C. This Hon’ble Court may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other writ or order quashing and setting aside impugned order dated 05.12.2023 (Annexed at Annexure J) rejecting the refund claim of the petitioner.”

5. Brief facts of the case are as under:

5.1 The petitioner is a proprietory concern engaged in the business of trading in Cotton. The petitioner is duly registered under the provisions of the Central/State Goods and Service Tax Act,2017 [for short ‘the GST Act’]. The petitioner files return and pays tax under the GST Act.

5.2 The petitioner made purchases of cotton from farmers in the month of January 2023 and the same were supplied to the registered buyers. The petitioner is required to pay GST on reverse charge mechanism on purchases made from agriculturists.

5.3 However, at the time of filing of return in Form GSTR-3B for the month of January 2023, the consultant of the petitioner erroneously had shown the payment of GST on sale of cotton through electronic cash ledger as output tax liability instead of bifurcating it between the liability of the tax on reverse charge basis on purchases of cotton from agriculturist and output tax liability. Therefore, no tax was shown to be paid on reverse charge basis nor any input tax credit was claimed in respect of such tax.

5.4 It is the case of the petitioner that there was an error made by the consultant as the liability on purchases on reverse charge basis was not admitted and paid and effectively, the tax was paid including the liability of reverse charge basis on the entire output sales and output tax liability was discharged through electronic cash ledger.

5.5 The petitioner realised the error in the month of March 2023 but, in absence of any mechanism for rectification of return for the month of January 2023, the petitioner showed the liability of reverse charge tax to be paid for the month of January 2023 on the purchases in Form GSTR-3B filed for the month of March 2023 and accordingly the petitioner paid higher amount of tax of Rs.53,08,494/- through electronic cash ledger.

5.6 The petitioner, therefore, filed a refund application on 12.07.2023 to claim the excess amount of payment made in the month of March 2023. The respondent issued the deficiency memo on 26.07.2023 to the petitioner on the ground that the amount paid by the petitioner in the month of March 2023 for the reverse charge liability cannot be considered as an excess payment of tax.

5.7 The petitioner therefore, raised a grievance at the GST help desk of the respondent seeking permission to rectify the return