In the case of Bharti Airtel – Denial of GST refund the tax period between July to September 2017, Airtel had paid the amount of output tax liability by cash in excess of what was required. This happened in consequence of the non-functionality of GSTR-2A at the time. The same became operational with effect from September 2018 on account of which Airtel realized that there was no requirement to meet the output tax liability in cash since the amount of ITC available was sufficient to offset the same. In pursuance of the same, the request was made to rectify the GSTR-3B for the aforementioned period in accordance with the Circular dated 1.09.2017 so as to avail ITC and get the amount paid credited to the E-Cash Ledger. However, the rectification prayed for was restricted in respect of the period in which the error had occurred by Circular dated 29.12.2017.
It was decided in the Writ by the HC that the generation of auto-populated figures in GSTR-2A is not a mere facility but a right of the stakeholders so as to enable them to correct their returns in case of discrepancies.
It was decided by the HC that the excess payment made in place of making use of the ITC was the result of the department’s fault for not having operationalized the Forms GSTR-2, GSTR-2A, and GSTR-3. Thus, the HC concluded that Bharti Airtel should not be made to suffer. Instead, it should be entitled to the statutory right to claim the benefit of ITC available despite the fact that accumulated ITC could also be adjusted in the future. Accordingly, HC permitted rectification of GSTR-3B for the aforementioned period. Moreover, it was held that para 4 of Circular dated 29.12.2017 which intends to restrict rectification of GSTR-3B is in contradiction to the provisions of the GST Law.
However, the SC has held that the assessee should not have depended on the operationalization of the aforementioned forms. Rather, every registered person is under an obligation to maintain proper books of accounts and records related to transactions in respect of which output tax liability may occur. It was explicitly mentioned that every registered person has the responsibility to ascertain his entitlement of ITC as well as undertake self-assessment of his output tax liability along with the amount of ITC based on records and books kept under statutory mandate. Further, the portal is a mere facilitator and not the source of making self-assessment.
SC also opposed the invalidity of Circular dated 29.12.2017 on the ground that Section 39(9) clearly states that any omission or incorrect particulars in GSTR-3B should be corrected in the return to be furnished in the month or quarter during which such omission or incorrect particulars are noticed. The same has been reiterated in the circular.
Thus, SC has denied permission to rectify GSTR-3B for the aforementioned period. It has also been provided that whether liability is met by cash or ITC utilization is a matter of choice which if once exercised, cannot be reversed.
