The government has moved the Supreme Court (SC) against the Delhi High Court order allowing Bharti Airtel Ltd to claim Rs. 923 Crores in tax refunds by rectifying its goods and services tax (GST) returns filed earlier, according to a Bloomberg report.

What was the litigation in the case?

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 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. 

Source: https://www.livemint.com

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