MAY 14, 2025
GST Returns - No Ctrl+Z?
THIS the period 2017-18, for a few months, admittedly committed certain errors in his returns. The errors were of following nature.
i. Recipient's GSTIN/name has been wrongly mentioned.
ii. The invoice number/date wrongly mentioned.
iii. Some of the invoice wise details have been omitted to be reported in Form GSTR-1. However, Supply details were correctly given in GSTR-3 and tax duly remitted.
iv. IGST was inadvertently remitted under the heads SGST and CGST.
Why this comedy of errors? The taxpayer, with admirable candour, offered the following explanations:
1. Inadvertent carelessness on the part of a part-time accountant. (A part-time accountant, whose dedication to detail apparently took a part-time break.)
2. Errors had been occasioned during the initial months of implementation of Goods and Services Tax and thus it had also no knowledge of the conditions fully to meet the demands of the system.
3. Unfamiliarity with the procedures.
4. The newness in the system itself that had resulted in the commission of these errors.
5. It was only in December 2019 that these errors came to light on account of the customers bringing the same to its attention. (when eagle-eyed customers finally blew the whistle.)
6. Immediately on coming to know of the errors, an attempt was made to rectify the returns only to find that there was no mechanism set out under the Act or in the portal to enable the same.
You make a mistake, you are doomed; there is no way to correct it. Then what to do? He was faced with the digital equivalent of a locked door and a sign saying, "No Corrections Allowed, Go Directly to High Court." The taxpayer approaches the High Court in writ petition with a prayer for a mandamus directing the GST Department to enable the taxpayer to rectify clerical errors in the details uploaded by it in Form GSTR-1 for the period 2017-18.
To correct a mistake, you need to go to the High Court!
The High Court noted that the petitioner has averred that the tax liability has been met in full and it is only the correction of the errors that is sought, to enable proper reconciliation of the petitioner's returns and annexures with those of the third parties.
Though the GST Department filed a counter, the above contentions of the Writ Petitioner, have not been disputed.
The Standing Counsel for Revenue argued that there is no mechanism available as on date to issue mandamus as sought for.
The High Court accepted the prayer of the petitioner and issued mandamus to the Department to do the needful to enable uploading of the rectified GSTR-1. And directed that this exercise be completed within a period of six weeks.
This was by a single judge on 09.03.2023.
What do you think happened after that?
It seems not much. But obviously, the Revenue was not happy with the decision of the Single Judge and decided to appeal to a Division Bench. It seems that two petitions WMP No.8682 of 2025 and WMP No.8684 of 2025 were filed to condone the delay of 86 days in filing the appeal and delay of 540 days in paying deficit Court fees. These were allowed by the Court and so the Division Bench of the Madras High Court proceeded to decide the intra-court appeal. -
Revenue's Counsel submitted that for assessment year 2017-18, the Central Goods and Services Tax (Second Removal of Difficulties) Order, 2018 dated 31.12.2018 extended the last date for amendment to the date on which return for March 2019 falls due. He submitted that the last date for filing returns for March 2019 was extended to 23.04.2019 as per notification dated 22.04.2019 and, therefore, beyond that date, taxpayer cannot amend the returns pertaining to the period 2017-18.
The Bombay High Court in the case of Aberdare Technologies Pvt. Ltd. Vs. Central Board of Indirect Taxes & Customs - , had allowed the assessee to amend/rectify the form GSTR-1. The High Court referred to several other High Court judgements on the same issue and observed:
The GST regime as contemplated under the GST Law unlike the prior regime, has evolved a scheme which is largely based on the electronic domain. The diversity, in which the traders and the assessees in our country function, with the limited expertise and resources they would have, cannot be overlooked, in the expectation the present regime would have in the traders / assessees complying with the provisions of the GST Laws. There are likely to be inadvertent and bona fide human errors, in the assessees adopting themselves to the new regime. For a system to be understood and operate perfectly, it certainly takes some time. The provisions of law are required to be alive to such considerations.
In fact, the scheme of the GST laws itself would contemplate correct data to be available in each and every return of tax, being filed by the assessees. Any incorrect particulars on the varied aspects touching the GST returns would have serious cascading effect, prejudicial not only to the assessee, but also to the third parties.
This necessarily would mean, that a bona fide, inadvertent error in furnishing details in a GST return needs to be recognized, and permitted to be corrected by the department, when in such cases the department is aware that there is no loss of revenue to the Government. Such free play in the joint requires an eminent recognition. The department needs to avoid unwarranted litigation on such issues and make the system more assessee friendly. Such approach would also foster the interest of revenue in the collection of taxes.
And what did the Department do after the sagacious advice of the High Court? They took the matter in a special leave petition to the Supreme Court, which was dismissed by the Apex Court by order dated 21 March 2025 observing:
We are not inclined to interfere with the impugned judgment which is, in fact, just and fair, as there is no loss of revenue. Hence, the present special leave petition is dismissed.
The petitioner, Central Board of Indirect Taxes and Customs, must re-examine the provisions /timelines fixed for correcting the bona fide errors. Timelines should be realist as lapse/defect invariably is realized when input tax credit is denied to the purchaser when benefit of tax paid is denied. Purchaser is not at fault, having paid the tax amount. He suffers because he is denied benefit of tax paid by him. Consequently, he has to make double payment. Human errors and mistakes are normal, and errors are also made by the Revenue. Right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software are meant to ease compliance and can be configured. Therefore, we exercise our discretion and dismiss the special leave petition.
But there were other High Court judgements which did not allow the correction. The Supreme Court held:
Decisions of the High Courts in Bar Code India Limited v. Union of India and others - and Yokohama India Private Ltd vs. State of Telangana - , prima facie, do not lay down good law in this regard. Ratio therein may be examined in another case.
In Bar Code India Limited v. Union of India and others - , the High Court of Punjab and Haryana held:
The law is settled that a person who is engaged in business has to be well-versed with the provisions of law including the time frame provided under the said provisions. Both the companies, as asserted by the respondents, are engaged in business since long and if they have committed an error, the law cannot be changed for giving them any such benefit.
In Yokohama India Private Ltd vs. State of Telangana - , the Telangana High Court observed,
Beyond the statutorily prescribed period, an assessee cannot be permitted to carry out rectification which would inevitably affect obligations and liabilities of other stakeholders because of the cascading effect in the electronic records.
Anyway, as the Supreme Court has held that they do not lay down good law, the good law at present is that such errors have to be allowed to be corrected, not only for the benefit of the taxpayer but also for the well-being of all concerned including the Revenue.
Some of the observations made by the Courts as mentioned above are worth noting again by all concerned.
The scheme of the GST laws itself would contemplate correct data to be available in each and every return of tax.
This necessarily would mean, that a bona fide, inadvertent error in furnishing details in a GST return needs to be recognized and permitted to be corrected by the department.
The department needs to avoid unwarranted litigation on such issues and make the system more assessee friendly. Such approach would also foster the interest of revenue in the collection of taxes.
Human errors and mistakes are normal, and errors are also made by the Revenue.
Right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from right to do business.
Software limitation itself cannot be a good justification, as software are meant to ease compliance and can be configured.
May your returns be error-free and your compliance smooth.
Until next week
Comments/feedback welcome at vijaywrite@tiol.in or 9848111243 (WhatsApp)