TaxTMI 
TaxTMI 
2021 (3) TMI 494
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....e ITC and before filing of the GSTR-3b return; (D) Pending hearing, admission, and/or final disposal of this petition, Your Lordships may be pleased to stay the late fees of Rs. 50/- daily being charged on the petitioner for non-filing of the said return for the said month i.e, May-2019 and also may be pleased to stay the late fees of Rs. 50/- daily being charged for the subsequent due returns; (E) This Hon'ble Court may be pleased to wave the late fee charged for non-submission of the return for the month of May-2019 and further be pleased to wave the late fee being charged daily for the non-submission of returns due for the subsequent months by considering facts, circumstances and genuineness of the case; (F) To pass any such other and further orders as Your Lordships may deem just, fit in the interest of justice." 2. The facts, giving rise to this litigation, may be summarized as under; 2.1 The writ applicant is a proprietary concern and is engaged in the business of printing of dress materials etc. It is not in dispute that the proprietary concern is registered under the CGST/GGST Act, 2017. It appears that the writ applicant had submitted t....
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....Utkarsh Sharma, the learned standing counsel appearing for the respondents. 2.6 The short point for our consideration is whether the writ applicant is entitled to seek rectification of Form GSTR-3B for the month of May, 2019. 2.7 The aforesaid issue is no longer res-integra in view of the decision of the Delhi High Court in the case of Bharti Airtel Limited vs. Union of India & Ors., Writ Petition (Civil) No.6345 of 2018, decided on 05.05.2020. We quote the relevant observations of the Delhi High Court as under; "12. The controversy in the present case actually lies in a narrow compass. The grievance of the Petitioner pertains to the rectification of Form GSTR- 3B for the period from July to September, 2017. This is the tax period/month in which the error has crept in. Though, the question before us is a short one, however, since the same concerns the scheme of the CGST Act, we would have to delve into the concepts of filing of returns and the statutory provisions governing the same. The Scheme of filing of returns as envisaged by the CGST Act is explained herein below: a) Section 37(1) of the CGST Act provides that a registered person is required to file a ....
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.... Act contemplated a self-policing system under which the authenticity of the information submitted in the returns by registered person is not only auto-populated but is verified by the supplier and confirmed by the recipient in the same month. The statutory provisions, therefore, provided not just for a procedure but a right and a facility to a registered person by which it can be ensured that the ITC availed and returns can be corrected in the very month to which they relate, and the registered person is not visited with any adverse consequences for uploading incorrect data. 14. Now, let us also examine the rectification scheme under the Act. The statute provides for a 2-stage rectification procedure by which the errors or omissions can be rectified by a registered person. a) The 1st stage of rectification can happen under Section 37(1) read with Sections 38 (1), 38 (3) and 37 (2) of the CGST Act wherein a registered person could rectify the errors or omissions pertaining to a tax period in the return to be furnished for such tax period itself through a self-policing and auto-populated interaction on the system. b) The 2nd stage of rectification is provi....
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.... 2A were not operationalized - and because the systems of various suppliers were not fully geared up to deal with the change in the compliance mechanism, the Petitioner perhaps did not have the exact details of the input tax credit available for the initial three months i.e. the relevant period. In this situation, since Petitioner's ITC claim was based on estimation and the exact amount for the relevant period was not known, Petitioner discharged the GST liability for the relevant period in cash, although, in reality, ITC was available with it (though it was not reflected in the system on account of lack of data). Indisputably, if the statutorily prescribed returns i.e. GSTR 2 and GSTR 3 had been operationalized by the Government, the Petitioner would have known the correct ITC amount available to it in the relevant period, and could have discharged its liability through ITC. As a consequence, the deficiency in reporting the eligible ITC in the months of July - September 2017 in the form GSTR- 3B has resulted in excess payment of cash by the Petitioner. 17. Now that the correct figures are known to the Petitioner, and limited rectification of returns is permissible, wh....
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...., 2018, the output liability for the said months was adjusted by following the procedure as provided in the said circular. However, Mr. Gulati has explained, the output tax liability has substantially reduced on account of low tariff in the telecom sector. As a result, the input tax credit which has accumulated on account of erroneous reporting, cannot be fully utilized in the prevailing tariff structure. The surplus input tax credit is expected to grow, for the later months as well, and there would be further inflow of input tax credit. In these circumstances, the adjustment of the tax liability in subsequent tax period would not recompense the Petitioner. Mr. Gulati has drawn our attention to the tabulations placed on record to illustrate his point. Moreover, even if there is a possibility to adjust the accumulated ITC in future, that cannot be a ground to deprive the Petitioner the option to fully utilize the input tax credit which it is statutorily entitled to do so. 18. While arriving at this conclusion we also have to take into account that the Respondents have absolutely failed in operationalizing the forms that were originally envisaged under the Act. The scheme of....
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....e correctly reported in the FORM GSTR-1. Similarly, if the details of inward supplies or the eligible ITC have been reported less or more than what they should have been, the same maybe reported correctly in the FORM GSTR-2. This will get reflected in the revised output tax liability or eligible ITC, as the case may be, of the registered person. The details furnished in FORM GSTR-1 and FORM GSTR-2 will be auto-populated and reflected in the return in FORM GSTR-3 for that particular month." (emphasis supplied) The portion of the said circular underlined above, provided for reconciliation and restatement of tax liability based on the amended ITC of the relevant month. Later, Respondent introduced the impugned circular No. 26/26/2017- GST dated 29.12.2017, whereby the earlier Circular No. 7/7/2017-GST has been kept in abeyance. Para 3 of the said Circular provides for amendment/ rectification of errors, para 4 imposes a restriction on the same and stipulates that the rectification of errors can be done concurrently in the month in which the error is noticed, and not in the month to which the data relates. The relevant portion of the said circular is reproduced herein....
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....RM GSTR-1 should also preferably be made in the corresponding months." (emphasis supplied) 20. The earlier circular has not been rescinded by the impugned circular dated 29.12.2017, but only kept in abeyance. Be that as it may, we see no reason as to why the rectification/adjustment is being allowed in the month subsequent to when such errors relate, and the Respondents have restricted the mechanism of rectification to the same tax period, in which they were noticed and sought to be rectified. In our view, para 4 of Circular No. 26/26/2017-GST dated 29.12.2017 is not in consonance with the provisions of CGST Act, 2017. The impugned circular expressly states that the time period for filing of Form GSTR-2 and GSTR-3 for the months of July, 2017 to March, 2018 would be worked by a committee, as system-based reconciliation can only be operationalized after the relevant notification is issued. Thus, the impugned circular, in unequivocal terms, recognizes the concept of system-based reconciliation of ITC and output liability for the same tax period as per the statutory provisions. We, therefore, do not find any cogent reasoning behind the logic for restricting rectifica....
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....cile its input tax credit, the Respondents cannot today deprive the Petitioner of the benefits that would have accrued in favour of the Petitioner, if , such forms would have been enforced. The Petitioner, therefore, cannot be denied the benefit due to the fault of the Respondents. 21. In this regard, we may note the views of the Supreme Court in some of the judgments. In the case of Commissioner of Central Excise, Bolpur vs. Ratan Melting and Wire Industries, (2008) 13 SCC 1, a reference was made by a bench of three Judges in Ratan Melting & Wire Industries Case, (2005) 3 SCC 57 to a bench of five judges to determine the issue of what is the binding effect of a judgment of Supreme Court vis-à-vis CBEC circulars. The reference was necessitated in the backdrop of a confusion created on account of the view expressed by a five judge bench of the Supreme Court in para 11 of Dhiren Chemical Industries Case, (2002) 2 SCC 127 which states that "...regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that i....
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....t be affirmed and the decision of the Delhi Tribunal set aside insofar as it relates to the eligibility of LSP 340 to the benefit of the exemption notification. The Andhra Pradesh High Court was correct in coming to the conclusion that the Board had, in the impugned circular, predetermined the issue of common parlance that was a matter of evidence and should have been left to the Department to establish before the adjudicating authorities. The Bombay Bench was also correct in its conclusion that the circular sought to impose a limitation on the exemption notification which the exemption notification itself did not provide. It was not open to the Board to whittle down the exemption notification in such a manner..." (emphasis supplied) 23. We would also like to add that the Respondents have also not been able to expressly indicate the rationale for not allowing the rectification in the same month to which the Form GSTR-3B relates. The additional affidavit filed by the Respondents as per the directions of this Court, also skirts this question and has only attempted to give some explanation which is not convincing and lacks objectivity and rationality. Respondents hav....