Petition allowed for rectification of Form DRC-3 where wrong financial year shown inadvertently while reversing ITC

The HC allowed the petition for rectification of Form DRC-3 where the petitioner had inadvertently shown Financial Year 2019-20 instead of 2018-19 while reversing ITC for unsold units. The court found this to be a bona fide mistake as the petitioner was not entitled to any ITC in FY 2019-20 and had not availed any. Following the precedent in Star Engineers case, the court held that bona fide inadvertent errors in GST returns should be permitted to be corrected by the Department when there is no revenue loss to the Government, directing the Department to allow the rectification.

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Issues involved:
The issues involved in this case include the applicability of a new GST scheme for real estate developers introduced through Notification No. 3/2019, the reversal of Input Tax Credit (ITC) for unsold units, the treatment of ITC for different financial years, and the rectification of errors in Form DRC 03.

Applicability of New GST Scheme:
The new GST scheme introduced for real estate developers under Notification No. 3/2019 provided different GST rates without ITC for affordable housing properties and residential properties outside the affordable segment. Developers were given the option to choose between old rates with ITC or new rates without ITC for under-construction projects. The petitioner, a real estate developer, had not availed the option to pay GST under the old regime and was entitled to the concessional rate of tax without ITC for new projects and unsold units of existing projects post 1st April 2019.

Reversal of ITC for Unsold Units:
Developers paying tax under the new regime were required to reverse ITC pertaining to unsold units as of 31st March 2019. The petitioner had reversed ITC through DRC 03 Forms, but there was a discrepancy in the financial year mentioned in some of the forms. The petitioner contended that the reversal was made for the Financial Year 2018-19, and it was a bona fide clerical error. The petitioner had requested the authorities to consider the payments made for the correct financial year.

Treatment of ITC for Different Financial Years:
The petitioner had inadvertently shown the financial year as 2019-20 in some DRC 03 Forms instead of 2018-19. The petitioner argued that it was not entitled to avail ITC for the Financial Year 2019-20 and had not done so. Despite the petitioner's submissions and requests to consider the payments for the correct financial year, the authorities issued demands for reversal of ITC and payment of dues.

Rectification of Errors in Form DRC 03:
The petitioner sought to rectify the clerical error in the mentioned financial year in the DRC 03 Forms. The authorities initially refused to allow the amendment, stating there was no facility to amend the forms on the GST portal. However, the court held that the error was bona fide and directed the respondents to permit the petitioner to amend the forms to reflect the correct financial year within a specified period.

Conclusion:
The court, applying the principles from a previous judgment, directed the respondents to allow the petitioner to rectify the error in the DRC 03 Forms. The court ordered the respondents to permit the petitioner to amend the forms to reflect the correct financial year and disposed of the petition, with no costs imposed on either party.

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