Calcutta HC: Rejecting GSTR-9 Filing Form Can Cause Prejudice to Assessee’s Rights

In a recent decision, the Calcutta High Court ruled that taxpayer requests are prejudiced when mistakes committed are revenue-neutral.

The bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya has remanded the case back to the adjudicating authority, viz., the Assistant Commissioner, State Tax, Taltala, and New Market Charge, to consider the submissions made by the taxpayer, afford a chance of personal hearing, and analyse the annual return filed in GSTR-9.

Form GSTR-9 is an annual return that needs to be filed once for each fiscal year, by the registered taxpayers who were regular taxpayers, along with SEZ units and SEZ developers. The problem was whether the annual return furnished via the appellant in GSTR-9 for FY 2017-18 could be overlooked.

The appellant/assessee informed the department about certain information found in GSTR Form 9. The appellant explained that while preparing data for GSTR-9, they discovered that they had unintentionally overlooked certain output GST liabilities related to compensation cess from GSTR-3B returns for the pertinent fiscal year, as well as missed claiming the equivalent amount of input tax credit of cess for those supplies.

When filing GSTR-9, they fixed the error by precisely reporting the amount of compensation owed through them. As per the appellant they have depicted the actual ITC amount on the compensation cess in the GSTR-9 returns furnished through them, as could be viewed from the GSTR-9. In GSTR-2A, the ITC is also matching the auto-populated numbers.

According to the appellant, the error was inadvertent as the GST was a new tax in the pertinent period and he is a small taxpayer. No revenue loss to the government is there since the whole practice was revenue neutral. No gain was made to the appellant by depicting wrong numbers in their returns since they secured enough balance of ITC for the same.

There was no unintentional error, it was without any ulterior motive or mens rea or purpose to evade tax. Consequently, the authority was asked to consider the same. But, in the pre-show-cause notice, which was allocated on September 6, 2022, the authority was not slanted to do so, as urged by the appellant, on the foundation that the GSTR-3B was not corrected within the said time. The appellant proposed the representation, but the adjudicating authority in the order on December 15, 2023, maintained it.

The court quoted, “In our considered view, two aspects have appealed to us to send back the matter to the adjudicating authority. The first concerns the effect of GSTR-9. This is an annual return filed within the extended period of limitation viz., up to February 7, 2020, on account of various notifications issued by the Government due to the Covid pandemic. Therefore, if the GSTR-9, which was filed within time is not considered, the assessee’s rights would be greatly prejudiced. The second aspect that has persuaded us is the contention of the assessee that the entire matter is revenue neutral.”

Read Also: Comparison B/w GSTR 9 Annual & GSTR 9C Audit Return Forms

The court ruled that the appellant had filed the GSTR-9 within the extended period of limitation due to COVID-19 pandemic-related notifications and acknowledged the challenges encountered by taxpayers during the pandemic while remanding the case back to the adjudicating authority.