High Court allows GSTR-1 rectification beyond due date of filing of Annual Return

Petitioner is a company engaged in business of mining. It also undertakes transportation of goods for central government undertakings, like, Eastern Coalfields Limited, Central Coal Fields Limited etc. within the State of Jharkhand. In the year 2018 petitioner’s company was engaged by Eastern Coalfields Limited for providing services in relation to removal and re-handling of overburden from Dahernangi OC patch of Rajmahal Area.

While filing its return in Form GSTR 1 for January 2019 in March 2019 i.e., within the time prescribed, according to the petitioner an inadvertent error was committed in the GSTIN of Eastern Coalfields Ltd. (GSTIN No. 20AAACE7590E3ZX ) as petitioner’s employee quoted the GSTIN of one MIPL-NKAS (JV) (GSTIN No.20AAEAM0162G1Z9).

Petitioner approach this Court as this mistake was realized by it only in June 2021 during the final settlement of accounts with Eastern Coalfields Limited.

Relying upon decisions of the other High Court such as in the case of Nodal Officer, Jt. Commissioner, IT Grievance Vrs. Das Auto Centre [2022 (56) GSTL 257 (Cal. ) of the Calcutta High Court, para 6 & 7]; in the case of Chep India Private Limited Vrs. Union of India & others [ Writ Petition no. 1075 of 2021 of High Court on Bombay, para 3]; in the case of Hans Raj Sons Vrs. Union of India [2020(34) GSTL 58 (P&H) paragraph 6 and 7 of Punjab and Haryana High Court] and also in the case of Jigar Cars Pvt. Ltd. Vrs. Union of India [2021 (50) GSTL 113 (Guj.) para 8 of the Gujarat High Court], learned counsel for the petitioner submits that such correction in form GSTR-1 for the relevant period can be either made electronically through the GSTN portal or if it presents some technical difficulties on the part of GSTN, petitioner may be allowed to submit the rectified form manually also, as has been allowed by these jurisdictional High Courts.

Learned counsel for the petitioner Mr. Kartik Kurmy has relied upon the case of Sambhaji & others Vrs. Gangabai & others [(2008) 17 SCC 117, para 10 to 15] in support of the proposition that the procedure prescribed under the CGST Act and the rules referred upon by the respondent GSTN should not be construed as mandatory, as it is always subservient to and in aid to justice. No person has a vested right in any course of procedure. Learned counsel for the petitioner has also placed reliance on the case of Union of India Vrs. Bharti Airtel Ltd. [2021(54) GSTL 257 (SC) para 33] in support of the submission that the common portal is only a facilitator to feed or retrieve such information. The primary source for assessment or filing of returns is in the form of the agreements, invoices / challans, receipt of the goods and services and books of accounts, which are maintained by the assesse manually / electronically. It is submitted that since the common portal is only a facilitator, technical issues in its opening would not come into the way of correction of any errors in case it is not barred by law. Relying upon the case of Price Waterhouse Coopers Private Limited Vrs. Commissioner of Income Tax, Kolkata-I and another [(2012) 11 SCC 316, para 13, 15, 16] it is further submitted that in that the Hon’ble Supreme Court has acknowledged that it is possible that even the assesse could make a silly mistake which could be a bona fide and inadvertent error while submitting its return. In that case the Apex court did not find any concealment of income or furnishing of inaccurate particulars deliberately on the part of the assesse. Therefore the imposition of penalty on the assesse was set aside.

Learned counsel for the respondent State submits that the concerned joint Commissioner Administration (Headquarters) has already conducted the exercise as directed by this Court by an order dated 20th July 2022 and also opined that since M/s Eastern Coalfields limited deserve the input tax credit, but due to mistake in filing of GSTR-1 by the petitioner for the month of January 2019, it could not avail of the benefits of ITC and that the GSTN portal does not allow amendments of the returns after filing of annual return GSTR-9, hence the only recourse left is that GSTN portal allows the petitioner to amend GSTR-1 for the month of January 2019 and allows to amend GSTR-9 for the financial year 2019-20 as well.

Learned counsel for the respondent no.5 Eastern Coalfields submits that if such correction is allowed in the GSTR-1 of the petitioner relating to January 2019, the relevant ITC could be reflected in the GSTR-2A of the respondent no.5 and would enable it to avail the ITC to which it is entitled. He however submits that ITC availed by the Respondent no.5 has been reversed but it had entailed payment of interest thereon which Respondent no. 5 may be allowed to claim from petitioner. Learned counsel for the respondent no.6 submits that respondent no.6 has neither claimed the ITC wrongly reflected in its GSTR-2A on account of wrong entry in the GSTR-1 for January 2019 by the petitioner against one tax invoice nor is entitled to claim that ITC. It is not going to lose any tax or benefit of ITC on account of such correction.

What Court said?

12. In the instant case it appears that on account of an inadvertent error, the entry relating to Tax Invoice No. 01/2018- 19 dated 17th January 2019 could not be reflected in the GSTR-1 filed by the petitioner against the GSTIN of Eastern Coalfields Limited (GSTIN No. 20AAACE7590E3ZX). Instead it was quoted in the GSTIN of Respondent No.6 MIPL-NKAS (JV) [GSTIN No.20AAEAM0162G1Z9] which was not the recipient of such supplies. Though, Respondent No.5 availed of such input tax credit bona fide believing that it had paid the taxes against such invoices, but on realizing the same reversed the entries in May 2022 as the same we are not reflected in his GSTR-2A return for the said period. The said entries, though reflected in the GSTR-2A of Respondent No. 6 inadvertently, were not availed by Respondent No.6 and rightly so, as it had not received any such supplies against the tax invoice in question. It further appears that the mechanism conceived under substituted Rule 59 specifically, sub rule (3) and (4) and Rule 60(1) having not put into place by notification of form GSTR-2 and GSTR- 1A the petitioner could not discover such error in the absence of GSTR-2 being available to be filed by the recipient Respondent No.5. In the absence of notification of such forms GSTR-2 and GSTR-1A the Respondent No.6 could also not submit the relevant form GSTR-2 indicating such incorrect entries in its GSTR-2A due to incorrect entries in GSTR-1 by the petitioner. Since the mechanism provided for matching of details of inward supply furnished by a registered person or outward supply not being rightly declared by the supplier in his returns GSTR-1, not being place, such discrepancy could not be communicated to petitioner. The relevant form GST-MIS 1 and GST-MIS 2 as conceived under section 70 and 71 read with section 42 (prior to its omission under notification no.19/2022 and 18/2022 vide notification dated 28.09.2022 of CBIC) also having not been prescribed, the online mechanisms for discovery and correction of such mistake either by the supplier or by the recipient or both, could not take place. Petitioner therefore, appears to have a valid reason in not being able to rectify the entries in the GSTR-1 returns of March 2019 in the returns of September 2019 to be filed by 20th of October 2019 or the date of filing of the annual return, whichever is earlier. The error apparently came to the notice of the petitioner only during finalization of the accounts with respondent no.5 who had also by that time detected availment of ITC in lieu of the Tax Invoice No. 1/2018-19 dated 17th January 2019, though not reflected in its GSTR-2. Petitioner approached this court immediately thereafter on 9th July 2022 seeking a direction upon the respondent GSTN to allow it to rectify returns. The detailed structured mechanism conceived under the JGST Act and the rules framed thereunder having not been put into place, the online portal did not permit such correction by any aggrieved registered person on its own. Therefore, the necessity for such an aggrieved registered person to approach this court under Article 226 of the Constitution of India. It is not in dispute that such incorrect entries in GSTR-1by Petitioner for the period January 2019 filed in March 2019 were not going to entail any additional tax impact. The rectification exercise would remain revenue neutral. Such TRAN I forms have been allowed to be filed online or manually in cases where TRAN-1 forms were not filed within the time prescribed by certain registered persons/ assessees. The judgment relied upon by the learned counsel for the petitioner are to that effect.

13. Having gone through the decisions cited in support by learned counsel for the petitioner and that the instant case does not present any additional tax impact, or loss of revenue for the State Exchequer and, in fact, such correction of relevant returns in case of the petitioner i.e.,GSTR-1, GSTR-2A in case of the respondent no. 5 and 6 would allow the respondent no.5 to rightly avail the ITC against the tax paid under Tax Invoice number 1/ 2018-19 dated 17th January 2019 issued by the petitioner, we are of the considered view that interest of justice would be served if the petitioner is allowed to make the necessary correction in GSTR-1 form for January 2019. Such correction, if does not entail technical difficulties by the GSTN, may be allowed to be made online by GSTN by opening the portal for a limited period upon due communication to the petitioner and respondent no.5 and 6 as it would reflect corresponding correction in their GSTR-2A form for the relevant period. If such a course is not possible to be done online for technical reasons, the GSTN could allow the petitioner to make such corrections through manual mode. Let such correction be allowed to be made within a period of 8 weeks from the date of receipt of this order.

14. Writ petition is allowed in the manner and to the extent indicated here. It is left open for the Respondent No.5 to claim interest from the petitioner over the ITC which it had to reverse owing to error in filing of GSTR-1 in March 2019 by the petitioner by not mentioning the GSTIN of Respondent no. 5 in respect of the Tax Invoice No. 1/2018-19 dated 17.01.2019.

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