2023 (3) TMI 111 - HC - GST

Taxpayer Wins Right to Rectify GST Return Classification, Enabling Correct Input Tax Credit Submission

The HC allowed a GST return rectification after the deadline, permitting the petitioner to resubmit GSTR-1 forms under the correct category (B2B instead ... Rectification of GST returns after statutory deadline - input tax credit entitlement - manual acceptance of corrected GSTR-1 and facilitation by Department - no loss to revenue / no escapement of tax - prejudice to assessee Rectification of GST returns after statutory deadline - input tax credit entitlement - no loss to revenue / no escapement of tax - Petition to permit rectification of GSTR-1 filed as B2C instead of B2B for the periods 2017-18 and 2018-19 notwithstanding the lapse of the prescribed rectification deadline, to enable the principal contractor to claim Input Tax Credit. - HELD THAT: - The Court found that although the statutory last date for filing/rectification had passed, the mistaken classification in GSTR-1 (B2C instead of B2B) resulted in denial of legitimate Input Tax Credit to the petitioner rather than any loss or escapement of tax to the revenue. The petitioner discovered the error after the principal contractor withheld payment and repeatedly sought correction from the department without success. Having regard to the absence of prejudice to the revenue and the need to prevent undue hardship to the petitioner, and noting that similar relief was granted by a coordinate High Court in comparable circumstances, the Court exercised its discretionary writ jurisdiction to allow correction. The Court directed that the corrected GSTR-1 forms for the specified periods be received manually by the department and that the department facilitate uploading those details to the portal, to be completed within four weeks. Petitioner permitted to resubmit corrected GSTR-1 for the specified periods; respondents directed to receive the corrected forms manually and facilitate uploading within four weeks. Manual acceptance of corrected GSTR-1 and facilitation by Department - prejudice to assessee - Direction to respondents to accept corrected GSTR-1 forms manually and to assist in uploading, notwithstanding that the rectification deadline had expired. - HELD THAT: - The Court directed remedial administrative action rather than denying relief on the ground that the statutory deadline had passed. The direction was limited and prospective: respondents must receive the corrected returns manually and facilitate their entry on the portal, thereby removing the procedural impediment which prevented the petitioner from securing the Input Tax Credit. The relief was granted because permitting the correction would not cause loss to the revenue and denial would cause prejudice to the petitioner. Respondents ordered to accept corrected GSTR-1 manually and facilitate uploading of details within four weeks. Final Conclusion: Writ petition disposed of by permitting the petitioner to resubmit corrected GSTR-1 for 2017-18 and 2018-19; respondents directed to receive the corrected forms manually and facilitate their uploading within four weeks. Issues:- Rectification of GST Return filed under wrong category- Deadline for rectification- Request for rectification after deadline- Stand of Opposite Parties on rectification- Benefit of rectification to the Petitioner- Precedent set by Madras High Court- Court's decision on rectification and directions to Opposite PartiesRectification of GST Return filed under wrong category:The Petitioner sought permission to rectify the GST Return filed for specific periods in the wrong category to avail Input Tax Credit (ITC) benefit by the principal contractor. The error was in filing under B2C instead of B2B in GSTR-1.Deadline for rectification:The last date for filing the return was 31st March, 2019, and the deadline for rectification was 13th April, 2019, as per the law.Request for rectification after deadline:The Petitioner claimed that the error was noticed after the principal contractor withheld payment due to the error. Despite repeated requests, the Opposite Parties did not permit the Petitioner to correct the GSTR-1 Forms.Stand of Opposite Parties on rectification:The Opposite Parties argued that no indulgence could be granted to the Petitioner once the deadline for rectification had passed.Benefit of rectification to the Petitioner:Allowing the Petitioner to rectify the error would not cause any loss to the Opposite Parties and was necessary for the Petitioner to receive the ITC benefit, preventing unnecessary prejudice.Precedent set by Madras High Court:The Madras High Court, in a similar case, directed that the Petitioner be allowed to file the corrected form, setting a precedent for such rectifications.Court's decision on rectification and directions to Opposite Parties:The Court permitted the Petitioner to resubmit the corrected GSTR-1 for the mentioned periods and directed the Opposite Parties to receive it manually. The Department would then facilitate uploading the corrected details on the web portal within four weeks. The writ petition was disposed of with these directions.