[GST] Supreme Court refuses to refund excess payment of Rs 923 crores by Bharti Airtel Ltd

While noting that the law permitted rectification of errors and omissions only at the initial stages of Forms GSTR­1 and GSTR­3, a Supreme Court bench of Justices AM Khanwilkar and Dinesh Maheshwari has set aside the Delhi High Court judgment that allowed Bharti Airtel's plea for refund of excess GST of Rupees 923 Crores paid by it.

"In any case, the direction issued by the High Court being in the nature of issuing writ of mandamus to allow the writ petitioner to rectify Form GSTR­3B for the period ­ July to September 2017, in the teeth of express statutory dispensation, cannot be sustained." noted the Bench.

The Court further held that the law permitted rectification of errors and omissions only at the initial stages of Forms GSTR1 and GSTR3, but in the specified manner.

"It is a different dispensation provided than the one in pre-GST period, which did not have the provision of auto-populated records and entries..." it said.

It was further noted that an assessee could not be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR-3B, as this would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.

"We agree with the submission of the appellant that any indulgence shown contrary to the statutory mandate would not only be an illegality but in reality, would simply lead to chaotic situation and collapse of tax administration of Union, States and Union Territories. Resultantly, assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR­3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records."

With this view, the bench went on to uphold the circular issued by the Commissioner (GST) which had restricted the rectification of Form GSTR-3B in respect of the period in which the error had occurred.

An appeal was filed against the the judgment and order passed by the High Court of Delhi, whereby it allowed the writ petition filed by Bharti Airtel and read down the Circular issued by the Commissioner (GST), Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, GST Policy Wing, to the extent it restricted the rectification of Form GSTR­3B in respect of the period in which the error had occurred.

The High Court also allowed Bharti to rectify Form GSTR­3B for the period in which error had occurred, i.e., from July to September 2017 and directed the appellant that on filing of the rectified Form GSTR­3B, they shall, within a period of two weeks, verify the claim set forth by the respondent and give effect to the same once verified.

While disagreeing with the view taken by the Delhi High Court in allowing the same, the bench said,

".....it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assessee to enjoy the benefit of the seamless utilization of the input tax credit is by way of rectification of its return 50 submitted in Form GSTR­3B for the relevant period in which the error had occurred. Any unilateral change in such return as per the present dispensation, would have cascading effect on the recipients and suppliers associated with the concerned transactions. There would be complete uncertainty and no finality could ever be attached to the self-­assessment return filed electronically."

The Court also held that in the instant case the registered person was not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return to be furnished for the month or quarter in which such omission or incorrect particulars were noticed.

"Thus, it is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in the electronic credit ledger, the registered person opts to discharge OTL by paying cash. That is a matter of option exercised by the registered person on which the tax authorities have no control, whatsoever, nor they have any role to play in that regard. Further, there is no express provision permitting swapping of entries effected in the electronic cash ledger vis­a­vis the electronic credit ledger or vice versa." held the Bench.

Cause Ttitle: Union of India vs. Bharti Airtel Ltd and Ors