GSTR-1 Return wrongly filed

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my clients who filed GSTR-1 during the financial year 2017-18, effected ship-to-bill to concept u/s 10(1)(b) of IGST Act, while preparing the invoice he has mentioned the parties details i.e buyer and consignee interchangeably, accordingly he has filed the return wrongly. Later, when he came to know this mistake, he has immediately revised the invoices correctly. However, this was not corrected in the GSTR-1. In September 2019 his customer has issued a legal notice that he did not get the credit in their GSTR-2A and also they have received notice from the GST department for wrong availment of ITC in GSTR-3B. By the time, the opportunity given by the government for revising the GSTR-1 got expired.

Accorndingly, I have filed WRIT petition in the High Court to direct the authority to accept the revised return through online or manually. Based on the direction of the court (i.e. pass order after the opportunity of being heard) , the authority has issued the personal hearing notice to the concerned petitioner to submit the records. My client also appeared before the authority and showed that this is the wrong bill raised but subsequently the invoices were corrected. However, all the taxes to the government was discharged while filing the return. While hearing the authority, who heard the case was not consider the corrected invoices and with the support of the wrong invoices, he has passed the order and said that between GSTR-1 and Invoices are found in order. No correction is required. Hence, the petitioner prayer has been rejected.

Still, this case is pending with High Court, counter from the respondent has not been filed so far.

What is the course of action to be taken? Please advise me on this.

Thanks in advance.

[Ganeshan Kalyani]

Please try with CA certificate or seek declaration letter from the recipient to whom ITC was wrongly passed on thru GSTR-1 stating that he has not claimed the ITC.

[Shilpi Jain]

It sounds crazy that pepole have taken GSTR-2A so seriously and that too for FY2017-18. In respect of the legal notice it should be argued that it is not in the hands of supplier since the portal is not allowing. There are a few decisions under gst in transition credit which have held that merely because the portal does not allow rectification, the credit cannot be denied . These can be used here..

[KASTURI SETHI]

Yes. Books of accounts, being statutory records should prevail over Common Portal System.

[Ganeshan Kalyani]

However, notices are issued by department asking the reason for claiming more ITC in 3B than the ITC in GSTR-2A. The taxpayer need to reply to those notices.

[Shilpi Jain]

In these cases where the department has issued letters, no further proceedings have taken place. These letters have been issued to bring the fear and discipline of taking credit the way the department wants.

[CA Hemanth Kumar]

Substantial benefit of ITC cannot be denied merely due to a procedural lapse.

May be your client need to give an assurance to their customers stating that they will provide legal support for the notice issued by the department to increase the customers confidence.

We can also take reference from SC judgement in case of Bharathi Airtel 2021 (11) TMI 109 - SUPREME COURT where Hon`ble SC have categorically held that 2A is only a facilitative measure and eligibility of credit has to be seen as per books of accounts.

Para 46.........................................cardinal aspect of statutory obligation fastened upon the registered person to maintain books of accounts and record within the meaning of Chapter VII of the 2017 Rules, which are primary documents and source material on the basis of which self­assessment is done by the registered person including about his eligibility and entitlement to get ITC and of OTL. Form GSTR­-2A is only a facilitator for taking an informed decision while doing such self­assessment. Nonperformance or non-­operability of Form GSTR­-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered

AI Summary

Input Tax Credit eligibility rests on books of account; portal or GSTR-2A errors should not defeat entitlement. A supplier filed GSTR-1 with buyer and consignee details interchanged, later corrected invoices but missed the statutory revision window; the tax authority upheld the original GSTR-1 despite corrected records. Practical steps recommended include obtaining a CA certificate or recipient declaration that ITC was not claimed, replying to departmental notices about ITC discrepancies, and relying on books of account as primary evidence while treating GSTR-2A as only facilitative for Input Tax Credit eligibility.