Jharkhand HC refuses GST rectification beyond statutory deadline under Section 37 CGST Act despite COVID-19 claims

The Jharkhand HC dismissed a writ petition seeking rectification in Form GSTR-1 beyond the statutory limitation period. The petitioner-firm failed to upload invoices as B2B transactions and deposit tax liability, citing COVID-19 financial distress. The court held that Section 37 of CGST Act prohibits rectification after November 30 following the financial year. Unlike the precedent in Mahalaxmi Infra Contract Ltd., where only one invoice error existed with no payment dispute, this case involved multiple periods and non-payment of entire liability. The court refused to exercise Article 226 powers, emphasizing adherence to statutory provisions despite subsequent payment claims.

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Issues Involved:
1. Denial of Input Tax Credit (ITC) based on non-reflection in GSTR-2A.
2. Mechanism for rectification of GSTR-1 for financial years 2017-18 to 2021-22.
3. Deduction by Respondent 1 (ECL) from payments due to petitioner based on non-reflection of GST in GSTR-2A.
4. Applicability of Circular 183/15/2022-GST for financial years 2019-20 to 2021-22.
5. Denial of ITC where invoices are declared in the Annual Return and tax is discharged through FORM DRC-03.
6. Denial of substantive benefit of availing ITC due to procedural lapse.

Comprehensive Summary:

1. Denial of ITC Based on Non-Reflection in GSTR-2A:
The petitioner sought a declaration that ITC should not be denied merely because the invoice is not reflecting in GSTR-2A of the recipient when the tax has already been discharged by the supplier as per Section 16(2)(c) of the CGST Act, 2017. The court noted that the CGST Act requires the details of the invoice to be furnished by the supplier and communicated to the recipient, as specified in Section 37.

2. Mechanism for Rectification of GSTR-1:
The petitioner requested a mechanism to rectify its GSTR-1 for financial years 2017-18 to 2021-22 due to the absence of mechanisms for matching and amendment under Sections 42 and 43 of the CGST Act, 2017. The court highlighted that the statutory regime under the CGST Act specifies conditions and time limits for rectification, and the petitioner failed to comply with these statutory requirements.

3. Deduction by Respondent 1 (ECL):
The petitioner sought to restrain ECL from deducting amounts from future payments due to non-reflection of GST in GSTR-2A for the period 2017-18 to 2021-22. The court noted that ECL had already started deductions from the running bills of the petitioner on the grounds of non-deposit of tax liability amounting to Rs. 96,01,598/-. The court found that ECL's actions were in line with the statutory requirements and the petitioner's failure to rectify the errors timely.

4. Applicability of Circular 183/15/2022-GST:
The petitioner sought a declaration that Circular 183/15/2022-GST, which allows ITC to the recipient even when the invoice is not reflecting in FORM GSTR-2A for FY 2017-18 and 2018-19, should apply equally to financial years 2019-20, 2020-21, and 2021-22. The court did not find merit in extending the applicability of the circular beyond the specified financial years.

5. Denial of ITC Where Invoices are Declared in Annual Return:
The petitioner sought a declaration that ITC should not be denied where invoices have been declared by the supplier in its Annual Return and tax is discharged through FORM DRC-03. The court referred to the statutory provisions under Sections 16 and 37 of the CGST Act, which require strict compliance, and found that the petitioner did not meet these requirements.

6. Denial of Substantive Benefit of Availing ITC Due to Procedural Lapse:
The petitioner argued that the substantive benefit of availing ITC should not be denied due to procedural lapses. The court emphasized the importance of adhering to the statutory regime and the conditions laid down under the CGST Act for availing ITC. The court referred to the Supreme Court's decision in "Union of India Vs. Bharti Airtel Ltd., & Ors." (2022) 4 SCC 328, which highlighted the necessity of self-assessment and compliance with statutory requirements.

Conclusion:
The court dismissed the writ petition, stating that no relief could be granted to the petitioner due to non-compliance with the statutory regime under the CGST Act and the failure to rectify errors within the prescribed time limits. The court emphasized that the powers under Article 226 of the Constitution of India cannot be exercised to override statutory provisions.

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