Bombay HC Permits Rectification of Factual Mistakes in GSTR-1 Beyond Specified Time

A GST assessee is permitted by the Bombay High Court to amend the bonafide mistake in the GST Form GSTR-1 beyond the set time duration.

The petition contested a communication dated 27th September 2023 from the respondent-Deputy Commissioner, State Tax. In response to the petitioner’s application to modify or amend form GSTR-1 for the financial year 2021-2022, dated 11th September 2023, the petitioner was informed that the request couldn’t be approved due to being time-barred, resulting in the rejection of the petitioner’s application.

The communication outlined that despite no apparent loss of revenue to the Government exchequers upon evaluating the facts and supporting evidence, the provisions within the GST Act prohibit any further modifications or adjustments after the due date. Consequently, the request from the Company to amend GSTR-1 for sales transactions related to FY 2021-22 couldn’t be approved due to being time-barred, leading to the rejection of the application.

The petitioner operates within the design, development, manufacturing, and supply of diverse electronic components for industrial use. They assert themselves as regular suppliers to Bajaj Auto Limited (BAL) and adhere to diverse delivery terms outlined in the purchase orders received from BAL when delivering their products.

The petitioner maintains that in the financial year 2021-2022, they conducted deliveries of goods to various third-party vendors. They generated invoices following a “Bill-to-Ship-to-Model” as per BAL’s instructions. Throughout this period, the company correctly issued e-invoices and credit notes to BAL, citing its GST identification number (“GSTIN”).

The petitioner asserts that BAL was informed of an error post the correction due date in Form GSTIN-1 for the 2021-22 financial year by one of the vendors who received the goods. This transaction was notified in Form GSTR-2B after the due date.

In pursuit of this, the petitioner attempted to rectify the mentioned invoices to address the error. However, since the mistake came to light in November 2022, the GST Portal did not permit any modifications in Form GSTR-1 for the periods spanning July 2021, November 2021, and January 2022. Consequently, despite the petitioner’s submissions, these invoices didn’t reflect in BAL’s Form GSTR-2B but unintentionally appeared in the vendor’s Form GSTR-2B.

As a result, BAL couldn’t claim an Input Tax Credit (ITC) for those invoices. Thus, during the processing of the petitioner’s payment for March 2023, BAL deducted the equivalent GST amount, citing the non-claim of these invoices in Form GSTR-2B due to the use of a third party’s GSTIN instead of BAL’s. This resulted in BAL debiting the mismatched amount from the petitioner’s account.

However, during the filing of Form GSTR-1 for the periods of July 2021, November 2021, and January 2022, the GSTINs of third parties who received the shipments were inadvertently reported instead of declaring BAL’s GSTIN. Bharat Raichandani and Prathamesh Gargale represented the Petitioner, while Shruti D Vyas, Additional Govt. Pleader represented the State.

Raichandani, Counsel for the petitioner, argued that it was arbitrary for the Deputy Commissioner of State Tax to dismiss the petitioner’s request to amend or rectify Form GSTR-1 filed for the mentioned periods, either online or through manual means.

It was argued that the impugned letter clearly acknowledged the absence of any loss to the Government exchequer, yet, due to technical constraints within the GST Portal, adjustments beyond the due date were barred, leading to the rejection of the petitioner’s request. It was emphasized that such technicalities shouldn’t hinder the pursuit of justice.

Hence, the petitioner urged that they should be granted permission to amend or rectify the Form GSTR-1 for the relevant period.

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On the contrary, Vyas, representing the Revenue, didn’t contest the factual details but asserted that the provisions within the GST Act prevented the State Tax Officer from accepting the petitioner’s request for amending/rectifying Form GSTR-1 filed for the specified period.

Vyas also candidly stated that accepting the petitioner’s request would not cause any loss of revenue to the public exchequer.

The bench acknowledged Sub-section (9) of Section 39, allowing rectification of omissions or incorrect particulars within a specified timeframe, yet the proviso restricts such rectifications after the 30th of November following the financial year’s end or the actual filing date of the annual return, whichever is earlier. Sub-section (10) allows an extension if the return for previous tax periods wasn’t filed or if details of outward supplies per Section 37(1) were not furnished.

Furthermore, the bench highlighted that the proviso shouldn’t undermine the legislative intent apparent in Section 37(3) and Section 39(9) when addressing genuine and inadvertent errors in return filings, especially when there’s no revenue loss in rectifying such mistakes.

The bench emphasized that interpreting Section 37(3) alongside Sections 39(9) and (10) in opposition would result in absurdities or establish a system where department-maintained GST returns with incorrect particulars become unquestionable. Such an outcome contradicts the ethos of the GST regime, where each aspect of returns has a significant impact. This consideration is crucial, particularly when inadvertent human errors affect GST filings.

Additionally, the bench noted that the State Tax Officer had all the relevant information indicating that there was no illegality involved. What occurred was that the invoices generated by the petitioner for delivering goods to third-party vendors of BAL, under the bill-to-ship-to-model, led to BAL not availing input tax credit due to the error of the credit not reflecting in GSTR-1. This mistake arose because the petitioner used the third party’s GSTIN instead of BAL’s.

The bench mentioned that the State tax officer is required to provide the request of the applicant to revise the Form GSTR–1 for the period July 2021, November 2021, and January 2022, either through Online or manual means.

The bench made a clear distinction in this case, noting that similar situations, as observed in the present proceedings, were also evident in prior proceedings before various High Courts. These instances involved inadvertent and genuine errors by the assesses, without any indication of unlawful gains.

Consequently, in a ruling presided over by Justice Jitendra Jain and Justice G S Kulkarni, the bench directed the respondents to allow the petitioner to amend/rectify Form GSTR-1 for the periods of July 2021, November 2021, and January 2022. This permission, whether through online or manual methods, was to be granted within four weeks from the present date.

Additionally, the revenue authorities received instructions to facilitate the petitioner’s amendment/rectification of Form GSTR-1 for the mentioned periods, whether through online or manual procedures, within four weeks starting from the date of the judgment.