TMI Blog2020 (5) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... ch they relate, and the registered person is not visited with any adverse consequences for uploading incorrect data. Rectification scheme under the Act - HELD THAT:- The statute provides for a 2-stage rectification procedure by which the errors or omissions can be rectified by a registered person - While the GST regime envisaged the filing process and recording of ITC and payment of taxes as above, admittedly, due to system issues and under preparedness with regard to the extent of data to be processed, Form GSTR-2, and 3 were not made operational; and have been now completely done away with. Form GSTR-2A was made operational only in September 2018 by the Government. This Form is also valid in respect of the past periods commencing July 2017. Since Forms GSTR-2 and 3 could not be operationalized by the Government, the Government introduced Rule 61(5) (which was amended vide Notification No. 17/2017-Central Tax, dated 27.07.2017) and the Rule 61(6) in the CGST Rules, and provided for filing of monthly return in Form GSTR-3B which is only a summary return. Mr. Singh appearing for the Revenue does not controvert the submission of Mr. Gulati that Form GSTR3B is filled in manually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 - petition allowed. - W.P.(C) 6345/2018, CM APPL. 45505/2019 - - - Dated:- 5-5-2020 - Hon ble Mr. Justice Vipin Sanghi And Hon ble Mr. Justice Sanjeev Narula For the Petitioner : Mr. Tarun Gulati, Sr. Adv. with Mr.Sparsh Bhargava, Mr. Vipin Upadhyay, Mr.Shashi Mathews, Mr. Kamal Arya, Advs. For the Respondents : Mr. Harpreet Singh, Sr. Standing counsel with Ms. Suhani Mathur, Adv. JUDGMENT SANJEEV NARULA, J. 1. Bharti Airtel Limited (hereinafter referred to as Petitioner ) has preferred the present petition under Article 226 of the Constitution of India impugning inter alia, Rule 61 (5) of the GST Rules, Form GSTR- 3B and Circular No. 26/26/2017-GST (hereinafter referred to as the impugned circular ) dated 29.12.2017 as ultra vires the provisions of Central Goods and Services Tax Act, 2017 (CGST Act) and contrary to Articles 14, 19 and 265 of the Constitution of India. The challenge to the aforenoted provisions is principally for the reason that Petitioner is being prevented from correcting its monthly GST returns, and consequently seeking refund of the excess taxes paid. Brief Factual Background Controversy 2. To fully comprehend t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same GST Registration was reported as supply; in few instances, due to inadvertent error, NIL Form GSTR-3B were filed, though actually there was output tax liability. To sum it up, the paramount grievance of the Petitioner is that during the period from July, 2017 to September, 2017 (hereinafter referred to as the relevant period ), the Petitioner in its monthly GSTR- 3B recorded the ITC based on its estimate. As a result, when the Petitioner had to discharge the GST liability for the relevant period, the details of ITC available were not known and the Petitioner was compelled to discharge its tax liability in cash, although, actually ITC was available with it but was not reflected in the system on account of lack of data. The exact ITC available for the relevant period was discovered only later in the month October 2018, when the Government operationalized Form GSTR-2A for the past periods. Thereupon, precise details were computed and Petitioner realized that for the relevant period ITC had been under reported. The Petitioner alleges that there has been excess payment of taxes, by way of cash, to the tune of approximately ₹ 923 crores. This was occasioned to a great ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutory scheme of the CGST Act - which provides that the data filled by a registered person will be validated in that month itself, and thereafter any unmatched details be rectified in the month in which it is noticed. Accordingly, Petitioner impugns Rule 61 (5) From GSTR-3B and Circular No. 26/26/2017-GST dated 29.12.2017 as ultra vires the provisions of CGST Act to the extent, they do not provide for the modification of the information to be filled in the return of the tax period to which such information relates. The aforesaid provisions are also impugned on the ground that they are arbitrary, in violation of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India. Submissions of Learned Counsel 7. Mr. Tarun Gulati, learned Sr. Counsel for the Petitioner argued that impugned circular is ultra vires the CGST Act and the Rules. He submits that as per the Sections 37 to 43 of the CGST Act, a scheme for filling details of outward supplies, inward supplies, return of inward or outward supplies, ITC availed, tax paid, was to be followed. In these terms, the Petitioner has a statutory right to fill all the necessary details, when the aforesaid provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such delay in claiming credit cannot delay the period for which the same is claimed i.e. the last date for filing the Form GSTR-3B. Reliance was also placed upon the decision of Andhra Pradesh High Court in the case of Panduranga Stone Crushers v. Union of India, 2019-TIOL-1975-HC-APGST and also upon the decision of Punjab Haryana High Court in the case of Adfert Technologies Pvt. Ltd. v. Union of India Ors., 2019-VIL-537-P H. It was further submitted that this Court has also in plethora of cases including Lease Plan India Pvt. Ltd. v. Govt. of NCT Ors. [order dated 13.09.2019 - W.P. (C) 3309/2019] and Blue Bird Pure Pvt. Ltd v. Union of India Ors., [order dated 22.07.2019 - W.P.(C) 3798/2019] , observed that GST is still in a trial and error phase and has permitted the assesses to rectify/revise the returns. Lastly, it was argued that the revision of Form GSTR-3B is revenue neutral since the Respondents have already realised the tax leviable under the law. Moreover, the eligibility of the Petitioner in respect of the ITC claimed under the rectified/amended returns can be verified prior to rectification. 9. Per contra, Mr. Harpreet Singh, learned Sr. Standing counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already been filed) by way of commensurate reduction in ITC availed by him. This would enhance the compliance burden for the recipient. Another complexity would arise if such recipient is an exporter and claims refund of unutilized ITC under section 54(3) of CGST Act, 2017 read with rule 89 (4) of CGST Rules, 2017. In cases where refund has already been sanctioned and disbursed, the reduction of available ITC by recipient would make it a fit case for erroneous refund, thereby inviting demand under section 73 of the CGST Act, 2017. Thus, in order to ward of such complexities, the impugned circular and the provisions provide for rectification of GSTR-3B in the period subsequent to when the error etc. is noticed by an assessee and not for the period to which such error etc. pertains to. Analysis 12. The controversy in the present case actually lies in a narrow compass. The grievance of the Petitioner pertains to the rectification of Form GSTR3B for the period from July to September, 2017. This is the tax period/month in which the error has crept in. Though, the question before us is a short one, however, since the same concerns the scheme of the CGST Act, we would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach period by interaction, over the IT System, between the supplier and the recipient so as to reflect the correct details pertaining to the tax period in that particular tax period itself (i.e. a month). In short, the CGST Act contemplated a self-policing system under which the authenticity of the information submitted in the returns by registered person is not only auto-populated but is verified by the supplier and confirmed by the recipient in the same month. The statutory provisions, therefore, provided not just for a procedure but a right and a facility to a registered person by which it can be ensured that the ITC availed and returns can be corrected in the very month to which they relate, and the registered person is not visited with any adverse consequences for uploading incorrect data. 14. Now, let us also examine the rectification scheme under the Act. The statute provides for a 2-stage rectification procedure by which the errors or omissions can be rectified by a registered person. a) The 1st stage of rectification can happen under Section 37(1) read with Sections 38 (1), 38 (3) and 37 (2) of the CGST Act wherein a registered person could rectify the errors or omis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ITC available to it in the relevant period, and could have discharged its liability through ITC, instead of cash. We also find force in the submission of Mr. Gulati that since Form GSTR-2 2A were not operationalized - and because the systems of various suppliers were not fully geared up to deal with the change in the compliance mechanism, the Petitioner perhaps did not have the exact details of the input tax credit available for the initial three months i.e. the relevant period. In this situation, since Petitioner s ITC claim was based on estimation and the exact amount for the relevant period was not known, Petitioner discharged the GST liability for the relevant period in cash, although, in reality, ITC was available with it (though it was not reflected in the system on account of lack of data). Indisputably, if the statutorily prescribed returns i.e. GSTR 2 and GSTR 3 had been operationalized by the Government, the Petitioner would have known the correct ITC amount available to it in the relevant period, and could have discharged its liability through ITC. As a consequence, the deficiency in reporting the eligible ITC in the months of July - September 2017 in the form GSTR- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular No. 26/26/2017-GST, adjustment of tax liability of input tax credit is permissible in subsequent months. For the months of September/October, 2018, the output liability for the said months was adjusted by following the procedure as provided in the said circular. However, Mr. Gulati has explained, the output tax liability has substantially reduced on account of low tariff in the telecom sector. As a result, the input tax credit which has accumulated on account of erroneous reporting, cannot be fully utilized in the prevailing tariff structure. The surplus input tax credit is expected to grow, for the later months as well, and there would be further inflow of input tax credit. In these circumstances, the adjustment of the tax liability in subsequent tax period would not recompense the Petitioner. Mr. Gulati has drawn our attention to the tabulations placed on record to illustrate his point. Moreover, even if there is a possibility to adjust the accumulated ITC in future, that cannot be a ground to deprive the Petitioner the option to fully utilize the input tax credit which it is statutorily entitled to do so. 18. While arriving at this conclusion we also have to take into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details in FORM GSTR-1, if the outward supplies have been under reported or excess reported in FORM GSTR-3B, the same maybe correctly reported in the FORM GSTR-1. Similarly, if the details of inward supplies or the eligible ITC have been reported less or more than what they should have been, the same maybe reported correctly in the FORM GSTR-2. This will get reflected in the revised output tax liability or eligible ITC, as the case may be, of the registered person. The details furnished in FORM GSTR-1 and FORM GSTR-2 will be auto-populated and reflected in the return in FORM GSTR-3 for that particular month. (emphasis supplied) The portion of the said circular underlined above, provided for reconciliation and restatement of tax liability based on the amended ITC of the relevant month. Later, Respondent introduced the impugned circular No. 26/26/2017-GST dated 29.12.2017, whereby the earlier Circular No. 7/7/2017 GST has been kept in abeyance. Para 3 of the said Circular provides for amendment/ rectification of errors, para 4 imposes a restriction on the same and stipulates that the rectification of errors can be done concurrently in the month in which the error is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere adjustments have been made in FORM GSTR-3B of multiple months, corresponding adjustments in FORM GSTR-1 should also preferably be made in the corresponding months. (emphasis supplied) 20. The earlier circular has not been rescinded by the impugned circular dated 29.12.2017, but only kept in abeyance. Be that as it may, we see no reason as to why the rectification/adjustment is being allowed in the month subsequent to when such errors relate, and the Respondents have restricted the mechanism of rectification to the same tax period, in which they were noticed and sought to be rectified. In our view, para 4 of Circular No. 26/26/2017-GST dated 29.12.2017 is not in consonance with the provisions of CGST Act, 2017. The impugned circular expressly states that the time period for filing of Form GSTR-2 and GSTR-3 for the months of July, 2017 to March, 2018 would be worked by a committee, as system-based reconciliation can only be operationalized after the relevant notification is issued. Thus, the impugned circular, in unequivocal terms, recognizes the concept of system-based reconciliation of ITC and output liability for the same tax period as per the statutory provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forms envisaged under the Act, resulting in depriving the Petitioner to accurately reconcile its input tax credit, the Respondents cannot today deprive the Petitioner of the benefits that would have accrued in favour of the Petitioner, if , such forms would have been enforced. The Petitioner, therefore, cannot be denied the benefit due to the fault of the Respondents. 21. In this regard, we may note the views of the Supreme Court in some of the judgments. In the case of Commissioner of Central Excise, Bolpur vs. Ratan Melting and Wire Industries, (2008) 13 SCC 1, a reference was made by a bench of three Judges in Ratan Melting Wire Industries Case, (2005) 3 SCC 57 to a bench of five judges to determine the issue of what is the binding effect of a judgment of Supreme Court vis- -vis CBEC circulars. The reference was necessitated in the backdrop of a confusion created on account of the view expressed by a five judge bench of the Supreme Court in para 11 of Dhiren Chemical Industries Case, (2002) 2 SCC 127 which states that regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh High Court must be affirmed and the decision of the Delhi Tribunal set aside insofar as it relates to the eligibility of LSP 340 to the benefit of the exemption notification. The Andhra Pradesh High Court was correct in coming to the conclusion that the Board had, in the impugned circular, predetermined the issue of common parlance that was a matter of evidence and should have been left to the Department to establish before the adjudicating authorities. The Bombay Bench was also correct in its conclusion that the circular sought to impose a limitation on the exemption notification which the exemption notification itself did not provide. It was not open to the Board to whittle down the exemption notification in such a manner (emphasis supplied) 23. We would also like to add that the Respondents have also not been able to expressly indicate the rationale for not allowing the rectification in the same month to which the Form GSTR-3B relates. The additional affidavit filed by the Respondents as per the directions of this Court, also skirts this question and has only attempted to give some explanation which is not convincing and lacks objectivity and rationali ..... X X X X Extracts X X X X X X X X Extracts X X X X
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