The Calcutta High Court recently addressed a case involving a reporting error related to cess in the monthly GSTR-3B returns. The error was later rectified through the annual GSTR-9 return. The Court directed the authorities to reconsider the matter and take into account the corrections made in the annual return for the initial omission of cess.
The Single Bench of Justice Om Narayan Rai, in an order on November 26, 2025, has said that during the finalisation of the books of account, applicants realised their mistake and revealed the whole amount of cess in the annual report submitted in Form GSTR-9.
The Calcutta High Court, outlining on effect of Form GSTR-9, stated that non-consideration of the aspect that Input Tax Credit (ITC) on the Cess paid remained unavailed would violate the Constitutional Principles. It was cited that although Section 44(2) Amendment set a 3-year filing date for annual returns, but same was without penalties or prohibition; thus, late filing cannot be considered as barred.
“Indeed the explanation appended to Section 44(2) of the said Act of 2017 provided for a date by which annual returns were to be filed but then since there was neither any fatal consequence provided for failure to file the same within that time nor was there any negative mandate prohibiting filing of return after a particular period, therefore the same cannot be interpreted in a manner to totally preclude late filers from filing the return.” applicants, motor vehicle dealers made purchases in FY 2017-18 and paid GST together with Compensation Cess on inward supplies.
On outward supplies, applicants collected cess, but, assuming that no cess was subject to be paid as they had collected inward cess credit, cess was not revealed in GSTR-3B. Therefore, the applicants rectified the error by revealing cess in the annual return (GSTR-9), claiming revenue neutrality.
An SCN was provided to the applicant, which asked to recover Rs 44,71,625 as Cess not paid but collected from various suppliers at the time of outward supply of motor vehicles. The same has been directed to an order u/s 74 of the CGST Act, 2017, thereby fastening liability together with interest and penalty worth Rs. 1.28 crores. The Appellate Authority, on appeal, considering the applicant’s stance that non-disclosure of the cess amount was shown during filing GSTR-09, converted the section 74 proceedings into Section 73 proceedings. But the appellate authority does not acknowledge the effect of GSTR-9 and validated the tax obligation while removing the penalty amount.
The applicant contesting the appellate order claimed that the appellate authority made a mistake in not acknowledging the effect of GSTR-9 disclosure & unavailed ITC on inward cess. It was mentioned that via payment of a differential sum, viz., the difference between ITC available on the Cess paid by them to their supplier and the Cess collected by them from their purchasers, the error of initial non-disclosure of Cess had become revenue neutral. The GST Department cited that disclosure in GSTR-09 was outside the time limit specified in Section 44(2) of the CGST Act, 2017, as amended by the Finance Act, 2023.
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HC said that as the Appellate Authority overlooked the aspect of unavailed ITC on inward Cess, it resulted in disobeying GSTR‑9 disclosure and correction, humiliating the Constitutional mandate in Article 265.
Rectification Effect in GSTR-09
Section 44(2) of the CGST Act, 2017, vide the Finance Act, 2023, was revised and made obligatory prohibition on late filing was brought about, ordained to take effect from October 01, 2023. A regulatory time duration of 3 years has been specified by the amendment. It comprises a provision permitting the government, under particular conditions and notifications, to allow specific registered persons or classes of persons to file even after these three years.
HC perused Section 44 (2) of the CGST Act, 2017, as it existed before the revision in 2023, to cite that the applicant submitted GSTR-9 earlier, dated August 28, 2023, whereas the revision applied merely from October 01, 2023. Thereafter, the HC said that the differential sum between cess collected and ITC available was paid up by the Petitioner, making the error neutral. Also, it is directed to the norms mentioned by the Co-ordinate Bench in Ankit Kumar Agarwal, Bisweswar Midhya, and the Madras High Court in Sri Shanmuga Hardwares. As per that, the HC set aside the Appellate Authority order and remanded the same back for acknowledging the appeal afresh.
| Case Title | Bidyut Autotech Private Limited and Another vs. The Assistant Commissioner of State Tax |
| Case No. | WPA 12637 of 2025 |
| For Petitioner | Mr. Ankit Kanodia Ms. Megha Agarwal Mr. Piyush Khaitan |
| For Respondent | Mr. Swapan Kumar Dutta, Mr. Tanoy Chakraborty, Ms. Sumita Shaw, Mr. Saptak Sanyal |
| Calcutta High Court | Read Order |
