Tax Credit Restored: Procedural Error in Annual GST Return Does Not Invalidate Legitimate Input Tax Claims

Kerala HC allowed petitioner's claim for input tax credit after incorrectly marking place of supply in 2017-18 annual return. Court directed rectification of GST return, referencing Madras HC precedents in Deepa Traders and Akshaya Building Solution. Authorities must permit resubmission of corrected annual return within specified timeframe, ensuring legitimate tax credits are not lost.

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Issues:
1. Denial of input tax credit for marking wrong place of supply in annual return for the year 2017-18.
2. Interpretation of mistake in filing details related to credit under GST.
3. Relief and rectification of errors in annual return filing.

Analysis:
1. The petitioner was denied input tax credit for the year 2017-18 due to mistakenly marking the place of supply as 'other territory' instead of 'Kerala' in the annual return. The petitioner argued that being the year immediately after the introduction of GST, they should not be penalized for such inadvertent errors. Reference was made to judgments of the Madras High Court in similar cases to support the contention.

2. The Government Pleader contended that the demand notice issued to the petitioner was valid as the petitioner had indeed marked the place of supply incorrectly. It was emphasized that this error led to the non-receipt of tax due to the State of Kerala. The Government Pleader requested the court to allow the filing of a detailed counter affidavit if relief was to be granted to the petitioner.

3. After considering arguments from both sides and examining the judgments of the Madras High Court in analogous cases, the court held in favor of the petitioner. Citing the judgments in Deepa Traders and Akshaya Building Solution, the court acknowledged the inadvertent nature of the errors made by the petitioners. The court agreed that in the absence of an enabling mechanism, assessees should not be prejudiced from claiming legitimate credits. Consequently, the court allowed the petitioner to rectify the errors in the annual return filing and resubmit the correct details within a specified timeframe.

4. The court further referenced the Madras High Court's decisions in Deepa Traders and Akshaya Building Solution to emphasize the importance of rectifying errors to ensure that legitimate credits are not lost. Accordingly, the court set aside the original order denying input tax credit and directed the authorities to permit the petitioner to resubmit the annual return for the year 2017-18 with corrected details. The court clarified that any future demands on the petitioner could still be raised by the authority even after the fresh return filing.

5. To facilitate the resubmission of the annual return, the court directed the competent authority to enable the petitioner to file GSTR 9 for the year 2017-18. Additionally, considering the provisions of Section 17(5) of the IGST Act, the court suo motu impleaded the Goods and Services Tax Network as an additional respondent to ensure necessary actions by the GST Network in processing the corrected return. The writ petition was disposed of in line with the above directions and decisions.

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