2021 (11) TMI 109 - SC - GST

Supreme Court Upholds Circular on GSTR-3B Rectification

Union Of India Versus Bharti Airtel Ltd. & Ors.

The Supreme Court allowed the appeal, setting aside the High Court's judgment and dismissing the writ petition. The Court upheld the validity of the ... Validity of Circular issued by the CBIC - Jurisdiction - Form GSTR­-3B is return or not - imposition on rectification of Form GSTR­-3B in respect of the period in which the error had occurred - Circular No. 26/26/2017­GST dated 29.12.2017 - jurisdiction of the Delhi High Court to entertain the writ petition - writ petition suffered from the vice of nonjoinder of the necessary parties including that the High Court could not have issued a writ of mandamus - HELD THAT:- The writ petitioner was not challenging the individual action of the States or the Union Territories, but a policy decision of the Central authority who had issued the impugned Circular, namely, the Commissioner (GST). If the writ petitioner succeeded in that challenge, the consequential relief would follow. Non­impleadment of respective States/Union Territories would not come 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. 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 No. 1) was founded on non­operability of Form GSTR2A during the relevant period, which plea having been rejected as untenable and flimsy, it must follow that the writ petitioner/respondent No. 1 with full knowledge and information 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 (electronic­auto 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 - 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 for submitting the returns. 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 in Form GSTR­-3B for the relevant period in which the error had occurred - the assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR­-3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records. Suffice it to conclude that the challenge to the impugned Circular No. 26/26/2017­GST dated 29.12.2017, is unsustainable for the reasons noted hitherto - the stipulations in the stated Circular including in paragraph 4 thereof, are consistent with the provisions of the 2017 Acts and the Rules framed thereunder - appeal allowed. Issues Involved:1. Territorial jurisdiction of the Delhi High Court.2. Non-joinder of necessary parties.3. Validity and authority of the Circular dated 29.12.2017.4. Legal provisions regarding rectification of GSTR-3B returns.5. Impact of technical glitches in the GST portal on the right to rectify returns.6. Compliance with statutory provisions of the CGST Act, 2017 and the rules framed thereunder.Detailed Analysis:1. Territorial Jurisdiction of the Delhi High Court:The appellant argued that the Delhi High Court lacked territorial jurisdiction to entertain the writ petition since the issues pertained to GST, which involves both central and state authorities. The Court rejected this argument, noting that the registered office of respondent No. 1 is in Delhi, and the relief claimed involved central authorities based in Delhi. Therefore, the jurisdiction of the Delhi High Court was upheld.2. Non-joinder of Necessary Parties:The appellant contended that the writ petition suffered from non-joinder of necessary parties, specifically the State Governments/Union Territories. The Court found this argument unpersuasive, stating that the writ petition challenged a central policy decision and not individual actions of states. Thus, non-impleadment of respective States/Union Territories did not affect the maintainability of the writ petition.3. Validity and Authority of the Circular dated 29.12.2017:The impugned Circular was issued by the Commissioner (GST) to clarify various aspects of return filing under GST. The Court held that the Circular was issued under the authority of Section 168(1) of the CGST Act, 2017, and was thus valid. The argument that the Circular was issued without authority of law was rejected.4. Legal Provisions Regarding Rectification of GSTR-3B Returns:The High Court had read down paragraph 4 of the Circular to allow rectification of GSTR-3B returns for the period in which the error occurred. The Supreme Court found this approach flawed, emphasizing that Section 39(9) of the CGST Act explicitly allows rectification only in the return for the month or quarter during which the omission or incorrect particulars are noticed. The Court held that the High Court's interpretation was inconsistent with the statutory provisions.5. Impact of Technical Glitches in the GST Portal:The respondent argued that due to technical glitches in the GST portal, it was unable to access necessary information to correctly file returns. The Supreme Court dismissed this argument, stating that registered persons are legally obligated to maintain books of accounts and records, which serve as the primary source for self-assessment of tax liabilities. The non-operability of Form GSTR-2A was deemed a flimsy excuse.6. Compliance with Statutory Provisions of the CGST Act, 2017 and the Rules Framed Thereunder:The Court emphasized that the CGST Act and the Rules framed thereunder provide a clear mechanism for rectification of returns. The impugned Circular was found to be consistent with these provisions. The Court rejected the High Court's direction to allow rectification of GSTR-3B returns for the period in which the error occurred, holding that such rectification must be done in the return for the month or quarter during which the error is noticed, as per Section 39(9).Conclusion:The Supreme Court allowed the appeal, setting aside the High Court's judgment and dismissing the writ petition filed by respondent No. 1. The Court upheld the validity of the Circular dated 29.12.2017 and affirmed that rectification of GSTR-3B returns must comply with the statutory provisions of the CGST Act, 2017.