TMI Blog2021 (11) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... iction in issuing writ of mandamus, does not commend to us. If the conclusion reached by the High Court regarding the efficacy of impugned Circular was to be upheld, no fault can be found with the directions issued by it in paragraph 24 of the impugned judgment, reproduced above. Accordingly, the preliminary objections regarding the maintainability of the writ petition and the jurisdiction of the Delhi High Court deserve to be rejected. Whether the impugned Circular dated 29.12.2017 issued by the Commissioner (GST) is without authority of law? - HELD THAT:- In strict sense, it is not the direction issued by the Commissioner (GST) as such, but it is notifying the decision(s) of the Board taken in exercise of its powers conferred under Section 168(1) of the 2017 Act. It is a different matter that a circular is issued under the signatures of Commissioner (GST), but in essence, it is notifying the decision(s) of the Board, which has had authority and power to issue directions. Accordingly, the argument that the impugned Circular dated 29.12.2017 has been issued without authority of law, needs to be rejected. The entire edifice of the grievance of the writ petitioner (respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain, Adv. Mr. Kanu Agarwal, Adv. Mr. Mukesh Kumar Maroria, AOR For Respondent(s) Mr. Harish N. Salve, Sr. Adv. Mr. Tarun Gulati, Sr. Adv. Ms. Anuradha Dutt, Adv. Mr. Tushar Jarwal, Adv. Mr. Rahul Sateeja, Adv. Mr. Deepak Thackur, Adv. Mr. Anurag Soan, Adv. Mr. Sparsh Bhargava, Adv. Ms. B. Vijayalakshmi Menon, AOR J U D G M E N T A.M. KHANWILKAR, J. 1. This appeal emanates from the judgment and order dated 05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345 of 2018, whereby the High Court allowed the writ petition filed by respondent No.1 herein and read down paragraph 4 of the Circular No. 26/26/2017 GST dated 29.12.2017 ( impugned Circular ) issued by the Commissioner (GST), Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, GST Policy Wing (Commissioner (GST), to the extent it restricted the rectification of Form GSTR -3B in respect of the period in which the error had occurred. The High Court also allowed respondent No.1 to rectify Form GSTR -3B for the period in which error had occurred, i.e., from July to September 2017. Further, the High Court directed the appellant that on filing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where a return in FORM GSTR -3B has been furnished, after the due date for furnishing of details in FORM GSTR -2- (a) Part A of the return in FORM GSTR- 3 shall be electronically generated on the basis of information furnished through FORM GSTR -1, FORM GSTR -2 and based on other liabilities of preceding tax periods and PART B of the said return shall be electronically generated on the basis of the return in FORM GSTR -3B furnished in respect of the tax period; (b) the registered person shall modify Part B of the return in FORM GSTR- 3 based on the discrepancies, if any, between the return in FORM GSTR -3B and the return in FORM GSTR- 3 and discharge his tax and other liabilities, if any; (c) where the amount of input tax credit in FORM GSTR- 3 exceeds the amount of input tax credit in terms of FORM GSTR -3B, the additional amount shall be credited to the electronic credit ledger of the registered person. ; .. 5. This was followed by Notification No.18/2017 Central Tax dated 08.08.2017, whereby time to file Form GSTR -1 for the months of July and August 2017 was extended to 05.09.2017 and 20.09.2017 respectively. On the same day, in exercise of the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GSTR -3B for the month of January, February and March 2018 as 20th February, 20th March and 20th April, 2018 respectively. 10. The Commissioner (GST) then issued the impugned Circular on the subject of filing of returns under GST, clarifying certain issues considered by the Central Board of Indirect Taxes and Customs to usher in uniformity in implementation across field formations. By this Circular, the earlier Circular issued on 01.09.2017 was kept in abeyance until the system based reconciliation prescribed under that Circular was to be operationalized consequent to issue of relevant notification. Subparagraphs 3.1 and 3.2 of paragraph 3 of this Circular dealing with amendment/corrections/rectification of errors, provided as follows; 3. Amendment / corrections / rectification of errors: 3.1 Various representations have been received wherein registered persons have requested for clarification on the procedure for rectification of errors made while filing their FORM GSTR -3B. In this regard, Circular No. 7/7/2017 GST dated 1st September 2017 was issued which clarified that errors committed while filing FORM GSTR 3B may be rectified while filing FORM GSTR -1 and F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culate the OTL and the claim of ITC, during the period from July till September 2017, there was no formal or official mechanism to check the authenticity of data so as to claim ITC for the relevant period against the transactions effected by it with its suppliers. Whereas, an inbuilt mechanism was guaranteed by the common electronic portal to be put in place by the Competent Authority under the 2017 Act. However, during the initial period, after introduction of the common electronic portal, it had several deficiencies and was not geared up to follow the specified regime of auto populated data as predicated in Sections 37 and 38 of the 2017 Act. 13. Form GSTR -1 for the relevant months of July to September 2017 was required to be filed before 10.01.2018 vide Notification No.72/2017 Central Tax dated 29.12.2017. Significantly, Form GSTR -2A became operational only in September 2018. For that reason, as a stop gap arrangement, the registered persons were required to submit returns in Form GSTR -3B. It is only after Form GSTR -2A became operational in September 2018, it is stated that respondent No. 1 realized that it had sufficient amount in the ITC ledger account (electronic cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 300A of Constitution of India. (d) issue an appropriate writ, order or direction declaring the tax liability of the Petitioner filed under FORM GSTR -3B is provisional and the output tax liability of the Petitioner will only crystalize after the filing of FORM GSTR -1, 2 and 3. (e) issue an appropriate writ, order or directions in the nature of mandamus or any other writ, directing the Respondents to operationalize/start the facility of FORM GSTR -2 and FORM GSTR- 3 for period commencing from 01.07.2017; (f) issue an appropriate writ, order or directions in the nature of mandamus or any other writ, directing the Respondents to provide the Petitioner the facility for amendment and modification of FORM GSTR -3B and grant such consequential relief as may be necessary; (g) Pass any orders as this Hon ble Court may deem fit in the given facts and circumstances of the present case; 14. During the pendency of the writ petition, Forms GSTR -2, GSTR -2A and GSTR- 3 came to be operationalized w.e.f. September 2018. The Central Government then issued Notification No.49/2019 Central Tax dated 09.10.2019, thereby omitting Rule 61(6) w.e.f. 01.07.2017 and substituting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f July to September 2017. Further, the exact ITC in the electronic credit ledger for the relevant period could be known to respondent No. 1 a month later in October 2018, when GSTR -2A became operational. Only thereafter, respondent No. 1 realized that there had been an excess payment of ₹ 923 crores in cash for discharging OTL. In other words, despite the fact that a bona fide error had occurred for reasons beyond the control of respondent No. 1, yet respondent No. 1 was unable to correct the mistake in Form GSTR -3B for the relevant period. The High Court held that CGST contemplated a self policing system. Resultantly, the statutory provisions had provided for generation of auto populated data of the stakeholders. That was a right and not a mere facility made available to registered persons. Thus, every registered person had a right to correct the returns in the very month to which they relate and not visited with any adverse consequences for uploading incorrect data. The High Court noted the admission of the Department that the operation of Forms GSTR -2 and GSTR- 3 could not be effected due to technical issues at their end necessitating postponement for indefinite period. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o separate order is required to be passed in the application seeking interim relief. Accordingly, the said application is disposed of as such. 18. The appellant has assailed the view so taken by the High Court. At the outset, it was urged that the High Court had no territorial jurisdiction to entertain the writ petition filed by respondent No.1. This objection is founded on the argument that the source of power to levy and collect GST under the 2017 Act vests both in the State and the Centre. The Delhi High Court could not have decided the issues concerning other State(s) and that too without making them as party respondent. The writ petitioner has chosen to only implead the Council which is a body created only to decide about the policy and is not a tax collector as such. Thus, besides the High Court had no territorial jurisdiction, the writ petition suffered from the vice of non joinder of necessary parties. 19. As regards the merits, the appellant has invited our attention to the constitutional background and the erstwhile regimes of the central excise law, service tax law etc., and in contrast, the dispensation provided in the GST regime and the obligation of every o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extent required or to pay the OTL by cash. The Authorities have no role to play whatsoever in that regard. It is an option to be exercised by the registered person and not by the Authorities. This principle has remained the same both before the GST and also post GST regime. Indeed, the registered person has been provided with a common electronic portal or tax electronic portal, which is only an enabler and a facilitator in bringing on board all the registered persons which include the supplier, recipient, registered person and other recipients. The efficacy of common electronic portal or so to say malfunctioning thereof, does not extricate the registered person from the primary obligation of self assessment of OTL as predicated in Section 16 of the 2017 Act. For doing so, the registered person is obliged to maintain accounts and records as envisaged under Chapter VII of the 2017 Rules. That ought to be the basis for self assessment of OTL in the first place. On the basis of the facts and figures emanating from such records, the registered person can collate the relevant information regarding entitlement to avail ITC collected from supplier of goods or services or for both which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly return in Form GSTR- 3 by 20th of the following month and discharge his OTL. As aforesaid, to overcome the initial problems faced after introduction of the common electronic portal and the non operability of the concerned forms, it was decided to make a stop gap arrangement enabling the registered person to file his return electronically in Form GSTR -3B, which contains necessary information relevant for completing the self assessment process and payment of OTL, if any. Though a stop gap arrangement, it was always treated as return within the meaning of Section 39 of the 2017 Act. Any rectification regarding omission or incorrect particulars referred to therein, could be furnished in the month or quarter during which such omission or incorrect particulars came to be noticed. Taking any other view would result in ushering in inconsistency and uncertainty not only to the concerned registered person, but also to his recipient and supplier and other records not directly connected with the registered person. Hence, allowing correction/rectification of Form GSTR -3B of the concerned period is not permissible in the new dispensation; and for which reason, an express provision had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to the provisions of the 2017 Act; whereas, express provisions of the 2017 Act provide to the contrary. Further, the High Court erroneously assumed that the writ petitioner had submitted the monthly Form GSTR -3B for the period of July to September 2017, based on its estimate. The writ petitioner cannot be permitted to take such a plea despite the statutory requirement of maintaining accounts and records as provided by the 2017 Act and the Rules framed thereunder. Furthermore, effecting correction/rectification in the returns for the month or quarter during which such omission or incorrect particulars have been noticed, does not in any way result in denying the right to avail ITC. The fact that respondent No.1 would not be eligible to get refund of cash also, cannot be the basis to permit the registered person to swap the entry in the electronic cash ledger with the entry in the electronic credit ledger or vice versa. No such mechanism has been provided in the 2017 Act or the Rules framed thereunder. If permitted, even as one of the cases because of non operability of the forms at the relevant time, may result in chaotic situation and collapse of the tax administration of the U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common portal. It is supposed to provide for auto-populating of the records of supplier and the recipient including the facility of interaction of GSTN through Forms GSTR -1, 1A, 2, 2A and 3 and generation and filing of periodical returns. It contemplated an automatic matching, reversal and reclaim of ITC. The mechanism for rectification has been envisaged in Section 39(9) of the 2017 Act, which is subject to the steps to be taken under Sections 37 and 38 regarding matching and verification. The return to be filed in Form GSTR -3B had no such features and was only a stop gap arrangement, as the mechanism provided in Sections 37 and 38 was not put in place. The provision regarding rectification under Section 39(9), therefore, had no application to the stop gap arrangement of filing return in Form GSTR -3B, much less for the relevant period (July to September 2017). Hence, reliance placed on Section 39(9) of the 2017 Act to justify the stipulations specified in the impugned Circular dated 29.12.2017, cannot be countenanced. 27. It is urged that Form GSTR -3B is a summary return and does not contain the invoice wise details. The recipient who had no access to the vendor s returns h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in terms of Circular No. 7/7/2017 dated 01.09.2017, which predicated that the details furnished in Form GSTR -3B will be corrected based on Forms GSTR -1 and GSTR -2 and will be auto populated and will reflect in Form GSTR- 3 in that particular month. However, that was done away with by introducing impugned Circular No. 26/26/2017 GST dated 29.12.2017. The arrangement specified in the impugned Circular was against the spirit of the Act and the Rules framed thereunder. Hence, the High Court justly recorded that finding. It is urged that rectification/adjustment mechanism for the month when the errors are noticed is contrary to the scheme of the 2017 Act and would defeat the statutory right of the assessee by putting a fetter to not avail the ITC, though available in his account of electronic credit ledger. The High Court rightly read down paragraph 4 of the impugned Circular dated 29.12.2017 and also issued direction to allow the respondent to rectify Form GSTR -3B for the period to which error relates i.e., July to September 2017, subject to verification by the authorities concerned. This was obviously an equitable arrangement and not opposed to any provision of the Act or the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the way of the writ petitioner to pursue the cause brought before the High Court by way of subject writ petition. Even the argument regarding High Court having exceeded jurisdiction in issuing writ of mandamus, does not commend to us. If the conclusion reached by the High Court regarding the efficacy of impugned Circular was to be upheld, no fault can be found with the directions issued by it in paragraph 24 of the impugned judgment, reproduced above. Accordingly, the preliminary objections regarding the maintainability of the writ petition and the jurisdiction of the Delhi High Court deserve to be rejected. 31. Another issue that needs to be decided at the threshold is whether the impugned Circular dated 29.12.2017 issued by the Commissioner (GST) is without authority of law. Indisputably, the Circular has been issued to notify the clarification given by the Board in exercise of its powers conferred under Section 168(1) of the 2017 Act in order to consolidate the information in various notifications and circulars regarding return filing and to ensure uniformity in implementation across field formations. The decision was taken by the Board after considering various represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g returns on its own. No such auto populated electronic data was in vogue. It is the same pattern which had to be followed by the registered person in the post GST regime. 33. As per the scheme of the 2017 Act, it is noticed that registered person is obliged to do self assessment of ITC, reckon its eligibility to ITC and of OTL including the balance amount lying in cash or credit ledger primarily on the basis of his office record and books of accounts required to be statutorily preserved and updated from time to time. That he could do even without the common electronic portal as was being done in the past till recently pre GST regime. As regards liability to pay OTL, that is on the basis of the transactions effected during the relevant period giving rise to taxable event. The supply of goods and services becomes taxable in respect of which the registered person is obliged to maintain agreement, invoices/challans and books of accounts, which can be maintained manually/electronically. The common portal is only a facilitator to feed or retrieve such information and need not be the primary source for doing self-assessment. The primary source is in the form of agreements, invoices/ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 59 does make reference to Section 39, which deals with furnishing of returns, but the fact remains that for furnishing of returns, preparatory work has to be done by the assessee himself and is not fully or wholly dependent on the common electronic portal for that purpose. Just couple of weeks before the relevant period between July and September 2017, the writ petitioner/respondent No. 1 had been doing that exercise which it was expected to continue even under the post GST scheme. The factum of non operability of Form GSTR -2A, therefore, is flimsy plea taken by the writ petitioner/respondent No. 1. Indeed, if the stated form was operational, the same would have come handy to the writ petitioner for doing self assessment regarding eligibility of ITC and availing thereof. But it is a feeble excuse given by the writ petitioner/respondent No. 1 to assail the condition specified in impugned Circular dated 29.12.2017 regarding the rectification of the return submitted manually in Form GSTR -3B for the relevant period (July to September 2017). 37. The question of reading down paragraph 4 of the said Circular would have arisen only if the same was to be in conflict with the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on derived from its books of accounts and records, had done self-assessment and assessed the OTL for the relevant period and chose to discharge the same by paying cash. Having so opted, it is not open to the respondent to now resile from the legal option already exercised. It is for that reason, the respondent has advisedly propounded a theory that in absence of (electronic auto populated record) mechanism made available as per Sections 37 and 38, return filed in Form GSTR -3B is not ascribable to Section 39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules. This is yet another untenable plea taken by respondent No. 1. For, the appellant having realized that the mechanism specified in Sections 37 and 38 of the 2017 Act cannot be put in place due to non-operability of the forms governing such mechanism, had to amend the rules to make a stop gap arrangement until the entire mechanism became operational. Appellant not only amended the statutory rule but also provided for filing of return manually in Form GSTR -3B electronically through the common portal with effect from July 2017. This is manifest from the circulars/notifications issued from time to time including the timeline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame into effect from 01.07.2017 Vide Notification/GSR No. 772(E) dated 9th October, 2019 retrospectively. The validity of this amendment has not been put in issue. 42. The Delhi High Court in the impugned judgment, has taken note of decision of the Andhra Pradesh High Court in case of Panduranga Stone Crushers vs. Union of India Ors 2019-TIOL-1975-HC-AP-GST. This decision dealt with the period between July 2017 and March 2018 for the financial year 2017 2018. The petitioner therein had submitted Form GSTR -3B return through GST portal, as required. While doing so, he had inadvertently and by mistake reported IGST input tax credit in a column relating to import of goods and services instead of placing that particular amount, namely, IGST input tax credit in all other ITC column. The writ petitioner asserted that he was entitled to rectify such mistake which had crept in Form GSTR -3B returns. The Union of India had contended that said situation was covered by Section 39(9) of the 2017 Act and the petitioner could rectify the omission, but did not avail the chance to rectify or modify the returns. Therefore, he was not entitled to relief as claimed in the writ petition. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of Article 300A of the Constitution. This decision was on facts of that case concerning erroneous entry recorded in Form GSTR -3B and not regarding right asserted to swap the mode of payment of OTL in cash to be adjusted against electronic credit ledger as in the present case in the guise of rectification of return filed in Form GSTR -3B for the earlier period. 44. Reference was then made to decision of this Court in MRF Ltd., Kottayam vs. Asstt. Commissioner (Assessment), Sales Tax Ors. (2006) 8 SCC 702, wherein it is held that a person may have a legitimate expectation of being treated in a certain way by an administrative authority, even though he has no legal right in private law to receive such treatment. The High Court then referred to the decision of Delhi high Court in Krish Authomotors Pvt. Ltd. vs. Union of India Ors. 2019-TIOL-2153-HC-DEL-GST, which had permitted the writ petitioners to either submit the TRAN I form electronically by opening the electronic portal or to tender the said form manually before the specified date and thereafter to process the claim for ITC in accordance with law. The Punjab Haryana High Court agreed with the view taken by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the return to be furnished for the month or quarter in which such omission or incorrect particulars are noticed. Thus, it is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in the electronic credit ledger, the registered person opts to discharge OTL by paying cash. That is a matter of option exercised by the registered person on which the tax authorities have no control, whatsoever, nor they have any role to play in that regard. Further, there is no express provision permitting swapping of entries effected in the electronic cash ledger vis a vis the electronic credit ledger or vice versa. 48. A priori, despite such an express mechanism provided by Section 39(9) read with Rule 61, it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assessee to enjoy the benefit of the seamless utilization of the input tax credit is by way of rectification of its return submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is wholly unnecessary. 52. In view of the above, this appeal is allowed. The impugned judgment and order is set aside. Resultantly, the writ petition filed by respondent No. 1 before the High Court stands dismissed. There shall be no order as to costs. All applications stand disposed of. ---------------- Notes: 1. 39. Furnishing of returns. (1) to (8) .. (9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub section (1) or sub section (2) or sub section (3) or sub section (4) or sub section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed, subject to payment of interest under this Act: Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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