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2025 (5) TMI 1886 - HC - GSTRectification of form GSTR-1 uploaded for September 2020 with respect to those invoices issued to Respondent No.06 so as to enable the respondent No.06 to take credit of the tax paid by the petitioner notwithstanding the time limit prescribed in Section 16(4) of the CGST Act - HELD THAT - In Wipro Limited 2023 (1) TMI 499 - KARNATAKA HIGH COURT this Court under identical circumstances extended the applicability of the Circular to the assessment year 2019-20 onwards by holding having regard to the language employed in the Circular which contemplates rectification of the bonafide and inadvertent mistakes committed by the persons at the time of filing of Forms and submitting Returns in the peculiar and special facts and circumstances of the instant case I am of the considered opinion that the error committed by the petitioner in showing the wrong GSTIN number in the Invoices which was carried forward in the relevant Forms as that of ABB India Limited instead of the 5th respondent i.e. M/s. ABB Global Industries and Services Private Limited is clearly a bonafide error which has occurred due to bonafide reasons unavoidable circumstances sufficient cause and consequently the aforesaid Circular would be directly and squarely applicable to the facts of the instant case. So also under identical circumstances Bombay High Court in the case of M/s. Railroad Logistics (India) Pvt. Ltd. Vs. The Union of India Ors 2024 (2) TMI 57 - BOMBAY HIGH COURT has held we find that once a bona fide mistake of such nature has occurred it needs to be rectified. The present petition deserves to be allowed and necessary directions are to be issued to the respondent in this regard - Petition disposed off.
The core legal questions considered in this judgment include:
1. Whether the petitioner is entitled to rectify errors in the Form GSTR-1 returns relating to invoices issued to a recipient, despite the time limits prescribed under Section 16(4) of the CGST Act. 2. The applicability and scope of Circular No.183/15/2022-GST dated 27.12.2022 issued by the Central Board of Indirect Taxes and Customs, particularly whether its provisions extend beyond the specified assessment years 2017-18 and 2018-19 to subsequent years such as 2019-20 and 2020-21. 3. The permissibility of rectifying inadvertent and bona fide errors in GST returns, including errors in GSTIN numbers and classification of supplies, notwithstanding statutory timelines and procedural restrictions under the CGST Act and Rules. 4. The interpretation of Sections 16, 37, 38, 39, and 164 of the CGST Act concerning the filing, amendment, and rectification of GST returns and the conditions for availing Input Tax Credit (ITC). 5. The balancing of the legislative intent to maintain accurate and timely GST data with the practical realities of inadvertent human errors and the absence of certain statutory forms (e.g., GSTR-2 and GSTR-1A) that impede timely detection and correction of discrepancies. 6. The extent to which courts should intervene to permit rectification of GST returns to prevent loss of legitimate ITC to recipients and avoid undue prejudice to taxpayers. Issue-wise Detailed Analysis: 1. Entitlement to Rectify GSTR-1 Returns Despite Statutory Time Limits The petitioner sought directions to rectify errors in Form GSTR-1 for September 2020 related to invoices issued to a particular respondent, contending that the mismatch in GSTIN and address details was inadvertent. The respondents resisted on the ground that the Circular relied upon by the petitioner applied only to assessment years 2017-18 and 2018-19, thus excluding the relevant period. The Court examined the statutory provisions, notably Section 16(4) of the CGST Act, which prescribes a time limit for availing ITC, and Sections 37 to 39 dealing with filing and amendment of returns. It noted that while these provisions set timelines, the GST regime also envisages rectification of bona fide errors to maintain accuracy in tax records. Precedents from various High Courts, including Bombay, Madras, Orissa, and Jharkhand, were analyzed. These cases uniformly recognized that inadvertent and bona fide errors in GST returns should be permitted to be rectified, especially when no revenue loss is involved. The courts emphasized purposive interpretation of the statutory provisions to enable correction of errors to uphold the integrity of the GST system and protect the rights of taxpayers and recipients entitled to ITC. The Court also acknowledged the absence or delay in notification of certain statutory forms (GSTR-2, GSTR-1A) that would have otherwise facilitated early detection and correction of discrepancies, thereby justifying judicial intervention. Applying these principles, the Court held that the petitioner was entitled to rectify the errors notwithstanding the statutory time limits, especially since the errors were inadvertent and no loss of revenue was demonstrated. 2. Applicability and Scope of Circular No.183/15/2022-GST The Circular clarified procedures to address discrepancies between ITC claimed in Form GSTR-3B and reflected in Form GSTR-2A for FY 2017-18 and 2018-19, including cases of incorrect GSTIN reporting and other inadvertent errors. It prescribed a detailed verification process for proper officers to ascertain fulfillment of conditions under Section 16 of the CGST Act before allowing ITC claims. The respondents contended that the Circular's applicability was limited to the specified years and did not extend to later periods relevant to the petitioner. However, the Court, relying on the reasoning in the Wipro Limited case, extended the Circular's applicability to the assessment year 2019-20 and, by analogy and justice-oriented approach, to 2020-21 as well. This extension was justified on the basis of identical errors persisting in those years and the absence of any legislative prohibition against such extension. The Court emphasized that the Circular contemplates rectification of bona fide and inadvertent errors and provides a procedural framework that safeguards revenue interests while enabling taxpayers to correct mistakes. 3. Permissibility of Rectifying Inadvertent and Bona Fide Errors The Court extensively reviewed judgments from multiple High Courts that dealt with similar issues of rectification of GST returns:
The Court observed a consistent judicial trend favoring correction of inadvertent errors to maintain the integrity of the GST system, protect legitimate ITC claims, and avoid undue hardship to taxpayers. 4. Interpretation of Relevant Statutory Provisions The Court interpreted Sections 16, 37, 38, 39, and 164 of the CGST Act in light of the facts and precedents:
The Court held that these provisions should be read purposively to allow rectification of bona fide errors, especially when no loss of revenue is shown and the errors impede rightful ITC claims. The absence of notified forms and mechanisms for error detection justified judicial intervention to permit corrections beyond statutory timelines. 5. Balancing Legislative Intent and Practical Realities The Court acknowledged the GST regime's reliance on electronic returns and the challenges faced by taxpayers in adapting to the new system. It recognized that inadvertent human errors are inevitable and that the law must be flexible enough to accommodate correction of such errors to prevent cascading negative effects on taxpayers and third parties. The Court emphasized that the legislative intent is not to create a rigid, punitive regime but to facilitate accurate tax compliance and revenue collection. Preventing rectification of bona fide errors would contravene this intent and unjustly prejudice taxpayers and recipients of ITC. 6. Judicial Intervention to Prevent Loss of Legitimate ITC and Prejudice The Court underscored that denying rectification in cases of inadvertent errors results in legitimate recipients being denied ITC, causing prejudice to both suppliers and recipients. Judicial intervention is warranted to uphold the principles of natural justice and equity, especially when the revenue is not adversely affected. The Court directed the respondents to follow the procedure prescribed in Circular No.183/15/2022-GST and to consider the petitioner's requests expeditiously, allowing rectification of GSTR-1 returns for the relevant years. Significant Holdings: "The error committed by the petitioner in showing the wrong GSTIN number in the Invoices which was carried forward in the relevant Forms ... is clearly a bonafide error, which has occurred due to bonafide reasons, unavoidable circumstances, sufficient cause and consequently, the aforesaid Circular would be directly and squarely applicable to the facts of the instant case." "The provisions of sub-section (3) of Section 37 read with Section 38 and sub-sections (9) and (10) of Section 39 need to be purposively interpreted. We cannot read sub-section (3) of Section 37 to mean that the assessee would be prevented from placing the correct position and having accurate particulars in regard to all the details in the GST returns being filed by the assessee and that there would not be any scope for any bonafide, and inadvertent rectification / correction." "In the absence of an enabling mechanism, the assessee should not be prejudiced from availing credit which they are otherwise legitimately entitled to. The error committed by the petitioner is an inadvertent human error and the petitioner should be in a position to rectify the same." "The GST regime as contemplated under the GST Law unlike the prior regime, has evolved a scheme which is largely based on the electronic domain... There are likely to be inadvertent and bonafide human errors... The law would be required to be interpreted and applied by the Department... Such free play in the joint requires an eminent recognition." Final determinations include:
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