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Bharti Airtel allowed to rectify its mistake done in GSTR-3B of FY 2017-18 and claim refund of Rs. 923 Crores : Delhi High Court

(Order pronounced on 05th May 2020)

Bharti Airtel had sufficient ITC in hand in the Financial Year 2017-18. However while discharing its output liability in GSTR-3B for the relevant period, the company did not utilise its ITC, instead paid the output liability in cash to the tune of Rs.923 crores. The reason behind this was submitted to be regulatory and technology-related uncertainties. GST was introduced as a new tax regime back in 2017 and this is the very reason as to why the company was not able to match its input tax credits records. 

The company in its defence said that this excess payment was a result of non-operationalisation of certain GST return forms. An another reason was that there was no mechanism to check Form GSTR-3B which would have been otherwise filled by the company manually. Thus, such a large amount went unnoticed.

The government did not permit the company to rectify the GSTR-3B returns of that period citing restrictions with regard to the Circular No. 26/2017 dated 29.12.2017. The circular restricts the rectification of Form GSTR-3B in respect of the period in which the error has occurred.

The Delhi High Court decided the case on merits and ordered that the statutory provisions can never be contradicted by any Central Government circular. Thus, government can not impose conditions which are absolutely against the scheme of the statute laid by law and allowed the company to rectify its GSTR-3B returns by adjusting the output liability with ITC and claim the refund of amount paid in cash.

The court held that the failure of the Government to operationalise the statutory returns, GSTR 2, 2A and 3 prescribed under the CGST Act, cannot prejudice the assessee. The GSTR 3B which was merely a summary return as an alternative did not have the statutory features of the returns prescribed under the Act. Therefore, if there were errors in capturing ITC on account of which cash was paid for discharging GST liability instead of utilising ITC, which could not be captured correctly at that time, the return should be allowed to be rectified in the very month in which the ITC was not recorded and the cash paid should be available as refund. 


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Author:

TaxReply


May 10, 2020

Comments


Can company do the rectification manually in the gstr 3b of july to sep 2017 or in the gstr 3b of the current months?
By: Rajat Kumar | Dt: May 11, 2020


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