Union Of India Through Its … vs Bharti Airtel Ltd. on 28 October, 2021


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Supreme Court of India

Union Of India Through Its … vs Bharti Airtel Ltd. on 28 October, 2021

Author: A.M. Khanwilkar

Bench: A.M. Khanwilkar, Dinesh Maheshwari, C.T. Ravikumar

                                                                    REPORTABLE


                                 IN THE SUPREME COURT OF INDIA

                                  CIVIL APPELLATE JURISDICTION

                                 CIVIL APPEAL NO.       OF 2021
                           (ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020)

           UNION OF INDIA                                      APPELLANT(S)

                                               VERSUS

             BHARTI AIRTEL LTD. & ORS.                         RESPONDENT(S)


                                          JUDGMENT

A.M. KHANWILKAR, J.

1. This appeal emanates from the judgment and order dated

05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345

of 2018, whereby the High Court allowed the writ petition filed by

respondent No.1 herein and read down paragraph 4 of the

Circular No. 26/26/2017­GST dated 29.12.2017 1 issued by the

Commissioner (GST), Government of India, Ministry of Finance,

Department of Revenue, Central Board of Excise and Customs,

GST Policy Wing2, to the extent it restricted the rectification of

Form GSTR­3B in respect of the period in which the error had
Signature Not Verified

Digitally signed by
NEETU KHAJURIA
Date: 2021.10.28
11:27:22 IST

occurred. The High Court also allowed respondent No.1 to rectify
Reason:

1 for short, “impugned Circular”
2 for short, “Commissioner (GST)”
2

Form GSTR­3B for the period in which error had occurred, i.e.,

from July to September 2017. Further, the High Court 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

respondent No.1 and give effect to the same once verified.

2. This lis is aftermath of enacting the Central Goods and

Services Tax Act, 20173, which came into force with effect from

01.07.2017. Vide Notification No.10/2017 dated 01.07.2017,

Rules 59, 60 and 61 of the Central Goods and Services Tax Rules,

20174 were brought into force along with Forms GSTR­1, GSTR­2,

GSTR­2A, GSTR­3 and GSTR­3B.

3. In the context of the matter in issue, it may be apposite to

take note of the Notification No.17/2017­Central Tax dated

27.07.2017 issued for amending Rule 61 by altering the wording

of Rule 61(5) and introducing Rule 61(6). Rule 61(5), as it stood

earlier when it came into force, read thus:

“(5) Where the time limit for furnishing of details in
FORM GSTR­1 under section 37 and in FORM GSTR­2
under section 38 has been extended and the
circumstances so warrant, return in FORM GSTR­3B,
in lieu of FORM GSTR­3, may be furnished in such
manner and subject to such conditions as may be
notified by the Commissioner”

3 for short, “2017 Act”
4 for short, “2017 Rules”
3

4. This provision was not only substituted, but sub­Rule (6) was

also inserted in Rule 61 by the said amendment vide Notification

No.17/2017­Central Tax. The amended provision reads thus:

“Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs

Notification No. 17/2017 – Central Tax

New Delhi, the 27th July, 2017

G.S.R. ( )E.:­ In exercise of the powers conferred by
section 164 of the Central Goods and Services Tax Act,
2017 (12 of 2017), the Central Government hereby
makes the following rules further to amend the Central
Goods and Services Tax Rules, 2017, namely:­
(1) …..

…..

2. In the Central Goods and Services Tax Rules,
2017,
…..

(v) in rule 61, with effect from 1st July, 2017, for
sub­rule (5), the following sub­rules shall be substi­
tuted, namely:­

“(5) Where the time limit for furnishing of details
in FORM GSTR­1 under section 37 and in FORM
GSTR­2 under section 38 has been extended
and the circumstances so warrant, the Commis­
sioner may, by notification, specify that return
shall be furnished in FORM GSTR­3B electroni­
cally through the common portal, either directly
or through a Facilitation Centre notified by the
Commissioner.

(6) Where a return in FORM GSTR­3B has been
furnished, after the due date for furnishing of
details in FORM GSTR­2—

(a) Part A of the return in FORM GSTR­3 shall
be electronically generated on the basis of infor­
mation furnished through FORM GSTR­1, FORM
GSTR­2 and based on other liabilities of preced­
ing tax periods and PART B of the said return
4

shall be electronically generated on the basis of
the return in FORM GSTR­3B furnished in re­
spect of the tax period;

(b) the registered person shall modify Part B of
the return in FORM GSTR­3 based on the dis­
crepancies, if any, between the return in FORM
GSTR­3B and the return in FORM GSTR­3 and
discharge his tax and other liabilities, if any;

(c) where the amount of input tax credit in
FORM GSTR­3 exceeds the amount of input tax
credit in terms of FORM GSTR­3B, the addi­
tional amount shall be credited to the electronic
credit ledger of the registered person.”;

…..”

5. This was followed by Notification No.18/2017­Central Tax

dated 08.08.2017, whereby time to file Form GSTR­1 for the

months of July and August 2017 was extended to 05.09.2017 and

20.09.2017 respectively. On the same day, in exercise of the

powers conferred by Rule 61(5) of the stated Rules, the Central

Government issued Notification No.21/2017­Central Tax

specifying that the return for the months of July and August 2017

shall be furnished in Form GSTR­3B electronically through the

common portal before the dates as specified in the corresponding

entry in column (3) of the table given therein. To wit, the date for

filing of Form GSTR­3B for the month of July 2017 was notified as

20.08.2017 and that for the month of August 2017 was notified as

20.09.2017.

5

6. The Under Secretary to the Government of India issued

another Notification bearing No.23/2017­Central Tax dated

17.08.2017 to extend the time for filing Form GSTR­3B for the

month of July 2017 for persons opting to file Form GST TRAN­1

on or before 20.08.2017 till 28.08.2017, subject to fulfilment of

certain conditions like depositing of tax payable under the Act and

payment of interest, if any. Respondent No.1 filed its return in

Form GSTR­3B for the month of July 2017 on 31.08.2017.

7. The Commissioner (GST) issued another Circular

No.7/7/2017­GST dated 01.09.2017 relating to system­based

reconciliation of information furnished in Forms GSTR­1, GSTR­2

and GSTR­3B and the mechanism for correction of erroneous

details furnished in Form GSTR­3B.

8. On the representations received from the business

community, the Under Secretary to the Government of India

issued Notification No.35/2017­Central Tax dated 15.09.2017 in

exercise of the powers conferred by Section 168 of the 2017 Act

read with Rule 61(5) of the 2017 Rules and other enabling

provisions, on the recommendations of the Goods and Services

Tax Council5, specifying the dates for filing of return for the

5 for short, “the Council”
6

concerned month as per the table given therein, in Form GSTR­3B

electronically, through the common portal on or before the last

date specified in the corresponding entry in column (3) of the said

table. The last date for the concerned English calendar month

was specified as 20th day of the succeeding English calendar

month for the period between August and December 2017.

Respondent No.1 filed its return in Form GSTR­3B on 20.09.2017

for the month of August 2017 and on 16.10.2017 for the month of

September 2017.

9. The Under Secretary to the Government once again issued

Notification No.56/2017­Central Tax dated 15.11.2017, specifying

the timeline for filing of return in Form GSTR­3B for the month of

January, February and March 2018 as 20th February, 20th March

and 20th April, 2018 respectively.

10. The Commissioner (GST) then issued the impugned Circular

on the subject of filing of returns under GST, clarifying certain

issues considered by the Central Board of Indirect Taxes and

Customs6 to usher in uniformity in implementation across field

formations. By this Circular, the earlier Circular issued on

01.09.2017 was kept in abeyance until the system­based

6 for short, “the Board”
7

reconciliation prescribed under that Circular was to be

operationalized consequent to issue of relevant notification. Sub­

paragraphs 3.1 and 3.2 of paragraph 3 of this Circular dealing

with amendment/corrections/rectification of errors, provided as

follows;

“3. Amendment / corrections / rectification of
errors:

3.1 Various representations have been received
wherein registered persons have requested for
clarification on the procedure for rectification of errors
made while filing their FORM GSTR­3B. In this regard,
Circular No. 7/7/2017­GST dated 1st September 2017
was issued which clarified that errors committed while
filing FORM GSTR – 3B may be rectified while filing
FORM GSTR­1 and FORM GSTR­2 of the same month.
Further, in the said circular, it was clarified that the
system will automatically reconcile the data submitted
in FORM GSTR­3B with FORM GSTR­1 and FORM
GSTR­2, and the variations if any will either be offset
against output tax liability or added to the output tax
liability of the subsequent months of the registered
person.

3.2 Since, the GST Council has decided that the time
period of filing of FORM GSTR­2 and FORM GSTR ­3
for the month of July 2017 to March 2018 would be
worked out by a Committee of officers, the system
based reconciliation prescribed under Circular No.
7/7/2017­GST dated 1st September 2017 can only be
operationalized after the relevant notification is issued.
The said circular is therefore kept in abeyance till
such time.”
(emphasis supplied)

11. It may be useful to advert to paragraph 4 of the same

Circular, which reads thus:

“4. It is clarified that as return in FORM GSTR­3B do
not contain provisions for reporting of differential
figures for past month(s), the said figures may be
reported on net basis alongwith the values for current
month itself in appropriate tables i.e. Table No. 3.1,
8

3.2, 4 and 5, as the case may be. It may be noted that
while making adjustment in the output tax liability 7 or
input tax credit8, there can be no negative entries in
the FORM GSTR­3B. The amount remaining for
adjustment, if any, may be adjusted in the return(s)
in FORM GSTR­3B of subsequent month(s) and, in
cases where such adjustment is not feasible, refund
may be claimed. Where adjustments have been made
in FORM GSTR­3B of multiple months, corresponding
adjustments in FORM GSTR­1 should also preferably
be made in the corresponding months.”

(emphasis supplied)

12. Respondent No. 1 was, however, keen on availing of the

dispensation specified in the Circular dated 01.09.2017 for the

relevant period (July to September 2017), having realized that

there was surplus amount of ITC in its ledger account (electronic

credit ledger). It is the case of respondent No.1 that it had been

receiving various services from suppliers situated throughout

India including Delhi. It being a supplier of services as well as

recipient of services under the 2017 Act, was required to file the

details of outward and inward supplies for every tax period and

also of monthly return under the GST Act. In order to calculate

the OTL and the claim of ITC, during the period from July till

September 2017, there was no formal or official mechanism to

check the authenticity of data so as to claim ITC for the relevant

period against the transactions effected by it with its suppliers.

7 For short, “OTL”
8 For short, “ITC”
9

Whereas, an inbuilt mechanism was guaranteed by the common

electronic portal to be put in place by the Competent Authority

under the 2017 Act. However, during the initial period, after

introduction of the common electronic portal, it had several

deficiencies and was not geared up to follow the specified regime of

auto populated data ­ as predicated in Sections 37 and 38 of the

2017 Act.

13. Form GSTR­1 for the relevant months of July to September

2017 was required to be filed before 10.01.2018 vide Notification

No.72/2017­Central Tax dated 29.12.2017. Significantly, Form

GSTR­2A became operational only in September 2018. For that

reason, as a stop gap arrangement, the registered persons were

required to submit returns in Form GSTR­3B. It is only after

Form GSTR­2A became operational in September 2018, it is stated

that respondent No. 1 realized that it had sufficient amount in the

ITC ledger account (electronic credit ledger) during the relevant

period. Further, due to non­functionality of GSTR­2A, respondent

No. 1 had to discharge its OTL by depositing/paying in cash. Had

Form GSTR­2A been functional, there would have been no need

for respondent No. 1 to pay the amount in cash, but could have

utilized the ITC account (electronic credit ledger) for payment of
10

corresponding OTL. For that reason, respondent No.1 would urge

that if it was allowed to rectify Form GSTR­3B, so as to avail ITC

for the relevant period in terms of Circular dated 01.09.2017, the

amount paid by it in cash towards the OTL would get credited to

its electronic cash ledger account. However, the impugned

Circular dated 29.12.2017 comes in the way of respondent No. 1

in doing so. Resultantly, respondent No.1 approached the High

Court by way of writ petition under Article 226 of the Constitution

of India, filed on 31.05.2018, praying for the following reliefs:

“PRAYER
“In light of the facts and circumstances mentioned
above and in consideration of grounds taken above,
the Petitioner most humbly prays that this Hon’ble
Court may be pleased to:

(a) issue an appropriate writ, order or direction in
nature of declaration that Rule 61(5), FORM GSTR­3B
and Circular No.26/2017 dated 29.12.2017 are ultra
vires the provisions of the CGST Act to the extent they
do not provide for the modification of information in
the return of the tax period to which such information
relates and are arbitrary, in violation of Articles 14,
19(1)(g), 265 and 300A of Constitution of India.

(b) issue an appropriate writ, order or directions
declaring the Notifications No.23/2017­Central Tax
dated 17.08.2017, 35/2017­Central Tax dated
15.09.2017 and 56/2017­Central Tax dated
15.11.2017, the same as ultra vires the provisions of
Section 39(7) of the CGST Act to the extent it provides
for payment of tax finally under the CGST Act by the
date mentioned for filing FORM GSTR­3B;

(c) issue an appropriate writ, order or direction in
nature of certiorari or any other writ, order or direction
of like nature, to call for, examine the records in
relation to Circular No.26/2017 dated 29.12.2017 and
11

quash the same to the extent it does not provide for
the modification of the information in the return of the
tax period to which such information relates as being
arbitrary, in violation of Articles 14, 19(1)(g), 265 and
300A of Constitution of India.

(d) issue an appropriate writ, order or direction
declaring the tax liability of the Petitioner filed under
FORM GSTR­3B is provisional and the output tax
liability of the Petitioner will only crystalize after the
filing of FORM GSTR­1, 2 and 3.

(e) issue an appropriate writ, order or directions in
the nature of mandamus or any other writ, directing
the Respondents to operationalize/start the facility of
FORM GSTR­2 and FORM GSTR­3 for period
commencing from 01.07.2017;

(f) issue an appropriate writ, order or directions in
the nature of mandamus or any other writ, directing
the Respondents to provide the Petitioner the facility
for amendment and modification of FORM GSTR­3B
and grant such consequential relief as may be
necessary;

(g) Pass any orders as this Hon’ble Court may deem
fit in the given facts and circumstances of the present
case;”

14. During the pendency of the writ petition, Forms GSTR­2,

GSTR­2A and GSTR­3 came to be operationalized w.e.f. September

2018. The Central Government then issued Notification

No.49/2019­Central Tax dated 09.10.2019, thereby omitting Rule

61(6) w.e.f. 01.07.2017 and substituting Rule 61(5) from the same

date to read as follows:

“Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs

Notification No. 49/2019 – Central Tax
12

New Delhi, the 9th October, 2019

G.S.R……(E). ­ In exercise of the powers conferred by
section 164 of the Central Goods and Services Tax Act,
2017 (12 of 2017), the Central Government hereby
makes the following rules further to amend the Central
Goods and Services Tax Rules, 2017, namely:
(1) …..

(4) In the said rules, in rule 61,­

(a) for sub­rule (5), the following sub­rule shall be
substituted, with effect from the 1st July, 2017
namely:­

“(5) Where the time limit for furnishing of details in
FORM GSTR­1 under section 37 or in FORM GSTR­2
under section 38 has been extended, the return
specified in sub­section (1) of section 39 shall, in such
manner and subject to such conditions as the
Commissioner may, by notification, specify, be
furnished in FORM GSTR­3B electronically through
the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:

Provided that where a return in FORM GSTR­3B is
required to be furnished by a person referred to in
sub­rule (1) then such person shall not be required
to furnish the return in FORM GSTR­3;

…..”
(emphasis supplied)

We have adverted to this Notification whilst noting that validity

thereof has not been challenged, though it has come into effect

from 01.07.2017 and governs the period between July and

September 2017, which is subject matter of this proceedings.

15. Notably, the High Court did not set aside the impugned

Circular dated 29.12.2017, but preferred to read down only

paragraph 4 thereof to the extent it restricted the rectification of

Form GSTR­3B in respect of period in which the error had
13

occurred. For, the High Court was of the view that the stated

restriction was contrary to the provisions of the 2017 Act and the

Rules framed thereunder.

16. The High Court in its judgment took note of the repeated

technical glitches in the electronic common portal introduced by

the Department, during the transition phase from the erstwhile

regime to the GST regime. The High Court then noted that

respondent No.1 had submitted its monthly Form GSTR­3B based

on estimates, for the relevant period of July to September 2017.

Further, the exact ITC in the electronic credit ledger for the

relevant period could be known to respondent No. 1 a month later

in October 2018, when GSTR­2A became operational. Only

thereafter, respondent No. 1 realized that there had been an

excess payment of Rs.923 crores in cash for discharging OTL. In

other words, despite the fact that a bona fide error had occurred

for reasons beyond the control of respondent No. 1, yet respondent

No. 1 was unable to correct the mistake in Form GSTR­3B for the

relevant period. The High Court held that CGST contemplated a

self­policing system. Resultantly, the statutory provisions had

provided for generation of auto­populated data of the stakeholders.

That was a right and not a mere facility made available to
14

registered persons. Thus, every registered person had a right to

correct the returns in the very month to which they relate and not

visited with any adverse consequences for uploading incorrect

data. The High Court noted the admission of the Department that

the operation of Forms GSTR­2 and GSTR­3 could not be effected

due to technical issues at their end necessitating postponement

for indefinite period. In other words, the Department itself was

not fully geared up to handle such an elaborate electronic

procedure. The High Court further noted as to how due to non­

functioning of Forms GSTR­2 and GSTR­3, Rule 61(5) and 61(6)

was required to be inserted in the 2017 Rules and provide for

monthly return in Form GSTR­3B, which was a summary return.

The High Court also accepted the contention of respondent No. 1

that it had to discharge the OTL for the relevant period in cash,

even though it had ITC available to its credit in electronic credit

ledger, due to the fault of the Department in not operationalizing

the statutorily prescribed Forms GSTR­2, GSTR­2A and GSTR­3.

That had resulted in excess payment of cash by respondent No.1.

The High Court also took note of the refund provisions to observe

that even if there was a possibility to adjust the accumulated ITC

in future, it could not be a ground to deprive respondent No.1 of
15

its option to fully utilize the ITC which it was statutorily entitled

to. The High Court held that there was no reason to restrict the

mechanism of rectification to the returns of subsequent months.

It also held that paragraph 4 of the impugned Circular dated

29.12.2017 was not in consonance with the provisions of the 2017

Act.

17. Accordingly, the High Court allowed the writ petition and

permitted respondent No.1 to rectify Form GSTR­3B for the period

to which the ‘error relates’ i.e., the months of July to September

2017. The operative directions issued by the High Court read

thus:

“24. Thus, in light of the above discussion, the
rectification of the return for that very month to which
it relates is imperative and, accordingly, we read down
para 4 of the impugned Circular No. 26/26/2017­GST
dated 29.12.2017 to the extent that it restricts the
rectification of Form GSTR­3B in respect of the period
in which the error has occurred. Accordingly, we allow
the present petition and permit the Petitioner to rectify
Form GSTR­3B for the period to which the error
relates, i.e. the relevant period from July, 2017 to
September, 2017. We also direct the Respondents that
on filing of the rectified Form GSTR­3B, they shall,
within a period of two weeks, verify the claim made
therein and give effect to the same once verified. In
view of the fact that the final relief sought by the
Petitioner has been granted and the petition is allowed,
no separate order is required to be passed in the
application seeking interim relief. Accordingly, the said
application is disposed of as such.”

18. The appellant has assailed the view so taken by the High

Court. At the outset, it was urged that the High Court had no
16

territorial jurisdiction to entertain the writ petition filed by

respondent No.1. This objection is founded on the argument that

the source of power to levy and collect GST under the 2017 Act

vests both in the State and the Centre. The Delhi High Court

could not have decided the issues concerning other State(s) and

that too without making them as party respondent. The writ

petitioner has chosen to only implead the Council which is a body

created only to decide about the policy and is not a tax collector as

such. Thus, besides the High Court had no territorial jurisdiction,

the writ petition suffered from the vice of non­joinder of necessary

parties.

19. As regards the merits, the appellant has invited our attention

to the constitutional background and the erstwhile regimes of the

central excise law, service tax law etc., and in contrast, the

dispensation provided in the GST regime and the obligation of

every outward supplier to pay OTL. It is urged that the GST is a

beginning of a new era of cooperative federalism and the purport of

Article 246A read with Article 279A of the Constitution fortify that

position. It is a regime to bring about paradigm shift in the

erstwhile taxes such as excise duty, service tax, entry tax, VAT

and other additional and minor levies based on multiple taxable
17

events, which have been subsumed into one taxable event called

“supply of goods and services”. The new dispensation enables

both the Union of India and the respective States to become joint

federal partner in taxing goods and services simultaneously and

have equal rates on the occurrence of the taxable event. Notably,

the 2017 Act is not ascribable to any Entry in List I, List II or for

that matter, List III. It is a sui generis regime in the Constitution

by virtue of Article 246A read with Article 279A and the field of

taxation thereunder is goods and services and the power to tax is

simultaneous and coextensive.

20. Shri N. Venkataraman, learned Additional Solicitor General

of India, took us through the provisions of the 2017 Act regarding

payment of duties/taxes and availing of ITC including the

eligibility and utilization of ITC. As regards the eligibility and

utilization of ITC, there is a statutory duty fastened on every

registered person governed under various regimes and presently

under the GST law, to pay OTL and a corresponding right to avail

and utilize ITC, subject to eligibility and conditions specified

therefor. The right to claim ITC, being a statutory right, is

circumscribed by conditions and restrictions, subject to which a

registered person is entitled to take credit. The provisions
18

regarding entitlement of ITC enable a registered person to utilize

the same for discharging the OTL. It is imperative upon a

registered person to maintain records regarding transactions

between suppliers and the recipients based on their agreements,

invoices and books of accounts, either manually or electronically.

The records so maintained by the registered person would itself

reveal about the eligibility to credit; and its availment is within the

exclusive domain of the supplier and the recipient concerned. The

registered person under the law is obliged to do a self­assessment

of its transactions and determine the OTL and exercise the option

to avail of and utilize the ITC to the extent required or to pay the

OTL by cash. The Authorities have no role to play whatsoever in

that regard. It is an option to be exercised by the registered

person and not by the Authorities. This principle has remained

the same both before the GST and also post GST regime. Indeed,

the registered person has been provided with a common electronic

portal or tax electronic portal, which is only an enabler and a

facilitator in bringing on board all the registered persons which

include the supplier, recipient, registered person and other

recipients. The efficacy of common electronic portal or so to say

malfunctioning thereof, does not extricate the registered person
19

from the primary obligation of self­assessment of OTL as

predicated in Section 16 of the 2017 Act. For doing so, the

registered person is obliged to maintain accounts and records as

envisaged under Chapter VII of the 2017 Rules. That ought to be

the basis for self­assessment of OTL in the first place. On the

basis of the facts and figures emanating from such records, the

registered person can collate the relevant information regarding

entitlement to avail ITC collected from supplier of goods or services

or for both which are used or intended to be used in the course of

furtherance of his business. Suffice it to observe that the

registered person is expected to exercise the option of utilizing ITC

or to pay by cash for discharging his OTL at the time of filing of

return on the information gathered from the primary record in his

possession.

21. The eligibility and availment of ITC is indeed subject to

conditions and restrictions in the manner specified in Section 49

of the 2017 Act. If the registered person intends to avail ITC, he

can do so by paying the OTL from his electronic credit ledger

referred to in Sections 2(46) and 49(2) of the 2017 Act. He can

avail of ITC on the conditions specified in Section 16(2) read with

Sections 41 and 49(2) of the 2017 Act. As per Section 59 of the
20

2017 Act, every registered person is required to self­assess the

taxes payable under the 2017 Act and furnish a return for each

tax period as specified under Section 39 of the 2017 Act.

22. It is urged that the scheme of the 2017 Act makes it amply

clear that the obligation in the matter of deciding about the

eligibility and mode of payment of OTL including self­assessment,

is to be exercised by the registered person himself and the

Authorities have no role to play at that stage. The registered

person cannot find fault with the deficiencies in the common

electronic portal so as to extricate from this obligation. Similar

obligation was required to be discharged by him even before the

GST regime came into being vide the 2017 Act with effect from

01.07.2017. The functions or features provided in the common

electronic portal of auto matching and auto populating of the

record of the supplier and the recipient and vice versa are only a

facility made available to the registered person. The features

provided in the context of Sections 42 and 43 of the 2017 Act

relating to ITC and OTL, are dynamic and seamless processes of

matching of invoices of the supplier and the recipient. The invoice

matching mechanism contemplated under Sections 42 and 43,

was expected to be accomplished by the introduction of a set of
21

forms, namely, GSTR­1, GSTR­1A, GSTR­2, GSTR­2A and GSTR­

3. As per the mechanism predicated in the 2017 Act, the entire

exchange processes were intended to happen between 11 th and

17th of every following month and once the reconciliation gets over,

every registered person had to file a monthly return in Form

GSTR­3 by 20th of the following month and discharge his OTL. As

aforesaid, to overcome the initial problems faced after introduction

of the common electronic portal and the non­operability of the

concerned forms, it was decided to make a stop gap arrangement

enabling the registered person to file his return electronically in

Form GSTR­3B, which contains necessary information relevant for

completing the self­assessment process and payment of OTL, if

any. Though a stop gap arrangement, it was always treated as

return within the meaning of Section 39 of the 2017 Act. Any

rectification regarding omission or incorrect particulars referred to

therein, could be furnished in the month or quarter during which

such omission or incorrect particulars came to be noticed. Taking

any other view would result in ushering in inconsistency and

uncertainty not only to the concerned registered person, but also

to his recipient and supplier and other records not directly

connected with the registered person. Hence, allowing
22

correction/rectification of Form GSTR­3B of the concerned period

is not permissible in the new dispensation; and for which reason,

an express provision had been made in Section 39(9) 9 that

rectification regarding omission or incorrect particulars in the

return so filed can be effected for the month or quarter during

which such omission or incorrect particulars are noticed and not

in the concerned return. The corrections permitted in Forms

GSTR­1 and GSTR­2 are of different nature, whereas the return

filed in Form GSTR­3B for the relevant period ought to remain as

it is.

23. It is further urged that Sections 37 and 38 of the 2017 Act do

not provide for right relating to eligibility of ITC. The obligation to

do self­assessment of ITC and of OTL and to pay the self­assessed

OTL by using the ITC or by cash payment, is a matter of exercising

9 39. Furnishing of returns.­
(1) to (8) …..

(9) Subject to the provisions of sections 37 and 38, if any registered
person after furnishing a return under sub­section (1) or sub­section (2) or
sub­section (3) or sub­section (4) or sub­section (5) discovers any omission
or incorrect particulars therein, other than as a result of
scrutiny, audit, inspection or enforcement activity by the tax
authorities, he shall rectify such omission or incorrect particulars in the
return to be furnished for the month or quarter during which such
omission or incorrect particulars are noticed, subject to payment of
interest under this Act:

Provided that no such rectification of any omission or incorrect
particulars shall be allowed after the due date for furnishing of return for the
month of September or second quarter following the end of the financial year,
or the actual date of furnishing of relevant annual return, whichever is earlier.

(emphasis supplied)
23

option for electing the mode of discharge of OTL. Further,

reconciliation predicated under Sections 37 and 38 between the

outward supplier, registered person and the subsequent recipient,

does not impact the rights and obligations of the registered person

regarding self­assessment of OTL and the duty to pay the self­

assessed OTL in the manner he wants to discharge by using self­

assessed ITC or cash payment.

24. It is urged that the option so exercised by the registered

person is his own volition and the Authorities have no concern or

any role to play at that stage. The High Court has completely

glossed over this crucial aspect and proceeded to answer the

matter in issue being swayed by the fact that common electronic

portal had faced rough weather during the initial phase and that

the statutory forms were not operationalized. The High Court was

impressed by the argument of the writ petitioner that due to non­

operability of the stated forms, the writ petitioner was denied of

access to the relevant information, in particular about the ITC

amount in its electronic credit ledger. This plea could not have

been taken by the writ petitioner considering the obligation of self­

assessment of ITC and of OTL and duty to pay self­assessed OTL.

The eligibility of ITC and the right to exercise option to pay the
24

OTL through the mode of his choice would come later. For doing

the self­assessment, the registered person is fully equipped with

accounts and records maintained by him as per the statutory

requirement, which are in his complete control and knowledge. In

other words, the High Court committed manifest error in opining

that the stipulation specified in the impugned Circular, is contrary

to the provisions of the 2017 Act; whereas, express provisions of

the 2017 Act provide to the contrary. Further, the High Court

erroneously assumed that the writ petitioner had submitted the

monthly Form GSTR­3B for the period of July to September 2017,

based on its estimate. The writ petitioner cannot be permitted to

take such a plea despite the statutory requirement of maintaining

accounts and records as provided by the 2017 Act and the Rules

framed thereunder. Furthermore, effecting correction/rectification

in the returns for the month or quarter during which such

omission or incorrect particulars have been noticed, does not in

any way result in denying the right to avail ITC. The fact that

respondent No.1 would not be eligible to get refund of cash also,

cannot be the basis to permit the registered person to swap the

entry in the electronic cash ledger with the entry in the electronic

credit ledger or vice versa. No such mechanism has been provided
25

in the 2017 Act or the Rules framed thereunder. If permitted,

even as one of the cases because of non­operability of the forms at

the relevant time, may result in chaotic situation and collapse of

the tax administration of the Union, States and the Union

Territories.

25. Per contra, learned counsel for respondent No. 1 has

supported the reasons as had weighed with the High Court in

upholding the challenge and reading down paragraph 4 of the

impugned Circular dated 29.12.2017 to the extent it restricts the

rectification of Form GSTR­3B in respect of the period in which the

error had occurred. It is emphasized that Form GSTR­3B is only a

stop gap arrangement to overcome the technical glitches in the

common electronic portal and non­operability of the concerned

statutory forms enabling auto­populating of relevant entries and

records. The fact that circumstances prevalent at the initial stages

of introduction of common electronic platform has been

acknowledged by the authorities and introduction of Form GSTR­

3B is a testimony of that admission. Having done so, it was not

open to the authorities to deny the taxpayers their dues, in

particular, right to revise their returns and avail of ITC. The

provision made in the impugned Circular dated 29.12.2017, not
26

permitting rectification of the return is conceptually flawed and

not consistent with the legislative intent and the provisions of the

2017 Act and the Rules framed thereunder. It denies the taxpayer

his statutory right to utilize credits, due to technical problems in

not putting the electronic platform in place. The respondent

realized that huge amounts of excess ITC is available in its books

only after Form GSTR­2A was made operational in September,

2018. By not permitting the respondent to avail of ITC shown in

the electronic credit ledger had resulted in collection of double tax

from the respondent and an unfair advantage to the Government.

Permitting the registered person to avail of the excess ITC in its

electronic credit ledger, cannot be considered to be unfair

advantage taken by the taxpayer.

26. The 2017 Act provided that in a Business to Business (B 2 B)

transaction, a supplier (of goods/services) and a recipient (of

goods/services) would interact with each other through a common

electronic portal which as per the statutory framework was

required to provision for payment of tax and furnishing of returns

including availing/taking and utilization of credit. Sections 37, 38

read with Section 42 of the 2017 Act and Rules 59 and 60 of the

2017 Rules are indicative of the features that were required to be
27

provided in the common portal. It is supposed to provide for auto­

populating of the records of supplier and the recipient including

the facility of interaction of GSTN through Forms GSTR­1, 1A, 2,

2A and 3 and generation and filing of periodical returns. It

contemplated an automatic matching, reversal and reclaim of ITC.

The mechanism for rectification has been envisaged in Section

39(9) of the 2017 Act, which is subject to the steps to be taken

under Sections 37 and 38 regarding matching and verification.

The return to be filed in Form GSTR­3B had no such features and

was only a stop­gap arrangement, as the mechanism provided in

Sections 37 and 38 was not put in place. The provision regarding

rectification under Section 39(9), therefore, had no application to

the stop­gap arrangement of filing return in Form GSTR­3B, much

less for the relevant period (July to September 2017). Hence,

reliance placed on Section 39(9) of the 2017 Act to justify the

stipulations specified in the impugned Circular dated 29.12.2017,

cannot be countenanced.

27. It is urged that Form GSTR­3B is a summary return and does

not contain the invoice­wise details. The recipient who had no

access to the vendor’s returns had no facility to verify the

correctness of the ITC taken. Form GSTR­3B is a consolidated
28

return wherein the assessee manually files its total credit, OTL etc.

The appellant cannot take advantage of its own failure of not being

able to operationalize Forms GSTR­2 and GSTR­3 right at the

inception when the provisions of the Act came into force. It is

unfair and inequitable that failure of the department should

benefit the department by forcing the registered person to

discharge OTL. On the other hand, the assessees were given to

understand right from 2015 that the system of return filing will be

automated under GST. The entire industry and trade accordingly

contemplated system changes based on these declarations i.e.,

return filing and taking/utilizing credit will be on the basis of

auto­populated returns. Notably, three days before the

implementation of GST, even though Sections 37, 38, 39, 42 and

43 were notified and were brought into force, the appellant issued

Notification No. 10/2017 ­ Central Tax dated 28.06.2017 stating

that the automated system will not be implemented and a

summary manual return under Section 61(5) in Form GSTR­3B,

which is “in lieu of” Form GSTR­3 has to be filed. The parameters

specified in Form GSTR­3 were substituted in Form GSTR­3B.

This arrangement was soon altered by issuing Notification No.

17/2017­Central Tax dated 27.07.2017, thereby amending Rule
29

61(5) retrospectively with effect from 01.07.2017, omitting the

words “in lieu of” and expressly mentioning that Form GSTR­3B

was introduced only till the period Sections 37 and 38 were not in

operation. Further, Form GSTR­3B was only a stop­gap

arrangement and while filing of Form GSTR­2 is operationalized,

Form GSTR­3 of the preceding tax periods will be automatically

generated and filled after acceptance/rejection contemplated

under Sections 37 and 38 of the 2017 Act. In October 2019, by

amending Rule 61(5) retrospectively making the return filed in

Form GSTR­3B final return, the automated system contemplated

under Sections 37 to 39 was formally done away with in the teeth

of statutory mandate.

28. According to respondent No. 1, it is only after

operationalization of GSTR­2A in September, 2018 that complete

data for July to September 2017 became available to it and on the

basis of which it wanted to revise the return filed for that period.

It was possible to do so in terms of Circular No. 7/7/2017 dated

01.09.2017, which predicated that the details furnished in Form

GSTR­3B will be corrected based on Forms GSTR­1 and GSTR­2

and will be auto­populated and will reflect in Form GSTR­3 in that

particular month. However, that was done away with by
30

introducing impugned Circular No. 26/26/2017­GST dated

29.12.2017. The arrangement specified in the impugned Circular

was against the spirit of the Act and the Rules framed thereunder.

Hence, the High Court justly recorded that finding. It is urged

that rectification/adjustment mechanism for the month when the

errors are noticed is contrary to the scheme of the 2017 Act and

would defeat the statutory right of the assessee by putting a fetter

to not avail the ITC, though available in his account of electronic

credit ledger. The High Court rightly read down paragraph 4 of

the impugned Circular dated 29.12.2017 and also issued direction

to allow the respondent to rectify Form GSTR­3B for the period to

which error relates i.e., July to September 2017, subject to

verification by the authorities concerned. This was obviously an

equitable arrangement and not opposed to any provision of the Act

or the Rules. This direction would enable the respondent to avail

of the ITC from the surplus shown in his account of electronic

credit ledger and the excess amount paid in cash would

correspondingly be reinstated in electronic cash ledger of the

respondent, which is to the tune of Rs.923 crores. As a matter of

fact, the impugned Circular dated 29.12.2017 is wholly without

jurisdiction as it arbitrarily alters the statutory framework. It is
31

also inconsistent with the return filing system under previous tax

regime, such as Service Tax Rules, Central Excise Tax Rules, Delhi

Value Added Tax Act, Income Tax Act etc. In all these legislations,

it would have been open to the assessee to rectify the original self­

assessed return at a later point of time. It is urged that the High

Court was competent to issue writ of mandamus as it has been

done in the present case.

29. We have heard Mr. N. Venkataraman, learned Additional

Solicitor General of India for the appellant and Mr. Harish N. Salve

and Mr. Tarun Gulati, learned senior counsel appearing for

respondent No. 1.

30. At the outset, the preliminary issue raised by the appellant

regarding jurisdiction of the Delhi High Court to entertain the writ

petition or that the writ petition suffered from the vice of non­

joinder of the necessary parties including that the High Court

could not have issued a writ of mandamus, need not detain us. As

regards the jurisdiction of the Delhi High Court, the registered

office of respondent No. 1 is in Delhi. The appellant (respondent

in the writ petition) also has its office in Delhi. The relief claimed

in the writ petition amongst others, was to challenge provisions of

the central Act and the circulars issued by the competent
32

authority having its office in Delhi. Hence, the jurisdiction of the

Delhi High Court cannot be a matter of any doubt. Similarly, the

argument of the appellant that State Governments/Union

Territories are necessary parties, does not take the matter any

further. As aforesaid, the writ petitioner was not challenging the

individual action of the States or the Union Territories, but a

policy decision of the Central authority who had issued the

impugned Circular, namely, the Commissioner (GST). If the writ

petitioner succeeded in that challenge, the consequential relief

would follow. In our opinion, non­impleadment of respective

States/Union Territories would not come in the way of the writ

petitioner to pursue the cause brought before the High Court by

way of subject writ petition. Even the argument regarding High

Court having exceeded jurisdiction in issuing writ of mandamus,

does not commend to us. If the conclusion reached by the High

Court regarding the efficacy of impugned Circular was to be

upheld, no fault can be found with the directions issued by it in

paragraph 24 of the impugned judgment, reproduced above.

Accordingly, the preliminary objections regarding the

maintainability of the writ petition and the jurisdiction of the Delhi

High Court deserve to be rejected.

33

31. Another issue that needs to be decided at the threshold is

whether the impugned Circular dated 29.12.2017 issued by the

Commissioner (GST) is without authority of law. Indisputably, the

Circular has been issued to notify the clarification given by the

Board in exercise of its powers conferred under Section 168(1) of

the 2017 Act in order to consolidate the information in various

notifications and circulars regarding return filing and to ensure

uniformity in implementation across field formations. The

decision was taken by the Board after considering various

representations received seeking clarifications on various aspects

of return filing such as return filing dates, applicability of

quantum of late fee, amendment of errors in submitting/filing of

Form GSTR­3B and other related queries. In strict sense, it is not

the direction issued by the Commissioner (GST) as such, but it is

notifying the decision(s) of the Board taken in exercise of its

powers conferred under Section 168(1) of the 2017 Act. It is a

different matter that a circular is issued under the signatures of

Commissioner (GST), but in essence, it is notifying the decision(s)

of the Board, which has had authority and power to issue

directions. Accordingly, the argument that the impugned Circular
34

dated 29.12.2017 has been issued without authority of law, needs

to be rejected.

32. Reverting to the analysis of the issues and contentions done

by the High Court, it is primarily focused on the grievance of the

writ petitioner that due to non­operability of Form GSTR­2A at the

relevant time (July to September 2017), it had been denied of

access to the information about its electronic credit ledger account

and consequently, availing of ITC for the relevant period and

instead to discharge the OTL by paying cash to its vendors. Thus,

it has resulted in payment of double tax and unfair advantage to

the tax authorities because of their failure to operationalize the

statutory forms enabling auto­populating statement of inward

supplies of the recipient and outward supplies including facility of

matching and correcting the discrepancies electronically. The

High Court, however, did not enquire into the cardinal question as

to whether the writ petitioner was required to be fully or wholly

dependent on the auto generated information in the electronic

common platform for discharging its obligation to pay OTL for the

relevant period between July and September 2017. The answer is

­ an emphatic No. In that, the writ petitioner being a registered

person, was under a legal obligation to maintain books of accounts
35

and records as per the provisions of the 2017 Act and Chapter VII

of the 2017 Rules regarding the transactions in respect of which

the OTL would occur. Even in the past (till recently upto the 2017

Act came into force), during the pre­GST regime, the writ

petitioner (being registered person/assessee) had been

maintaining such books of accounts and records and submitting

returns on its own. No such auto­populated electronic data was in

vogue. It is the same pattern which had to be followed by the

registered person in the post­GST regime.

33. As per the scheme of the 2017 Act, it is noticed that

registered person is obliged to do self­assessment of ITC, reckon

its eligibility to ITC and of OTL including the balance amount lying

in cash or credit ledger primarily on the basis of his office record

and books of accounts required to be statutorily preserved and

updated from time to time. That he could do even without the

common electronic portal as was being done in the past till

recently pre­GST regime. As regards liability to pay OTL, that is

on the basis of the transactions effected during the relevant period

giving rise to taxable event. The supply of goods and services

becomes taxable in respect of which the registered person is

obliged to maintain agreement, invoices/challans and books of
36

accounts, which can be maintained manually/electronically. The

common portal is only a facilitator to feed or retrieve such

information and need not be the primary source for doing self­

assessment. The primary source is in the form of agreements,

invoices/challans, receipts of the goods and services and books of

accounts which are maintained by the assessee

manually/electronically. These are not within the control of the

tax authorities. This was the arrangement even in the pre­GST

regime whilst discharging the obligation under the concerned

legislation(s). The position is no different in the post­GST regime,

both in the matter of doing self­assessment and regarding dealing

with eligibility to ITC and OTL. Indeed, that self­assessment and

declarations would be any way subject to verification by the tax

authorities. The role of tax authorities would come at the time of

verification of the declarations and returns submitted/filed by the

registered person.

34. Section 16 of the 2017 Act deals with eligibility of the

registered person to take credit of input tax charged on any supply

of goods or services or both to him which are used or intended to

be used in the course or furtherance of his business. The input

tax credit is additionally recorded in the electronic credit ledger of
37

such person under the Act. The “electronic credit ledger” is

defined in Section 2(46) and is referred to in Section 49(2) of the

2017 Act, which provides for the manner in which ITC may be

availed. Section 41(1) envisages that every registered person shall

be entitled to take credit of eligible input tax, as self­assessed, in

his return and such amount shall be credited on a provisional

basis to his electronic credit ledger.

35. As aforesaid, every assessee is under obligation to self­assess

the eligible ITC under Section 16(1) and 16(2) and “credit the same

in the electronic credit ledger” defined in Section 2(46) read with

Section 49(2) of the 2017 Act. Only thereafter, Section 59 steps

in, whereunder the registered person is obliged to self­assess the

taxes payable under the Act and furnish a return for each tax

period as specified under Section 39 of the Act. To put it

differently, for submitting return under Section 59, it is the

registered person who has to undertake necessary measures

including of maintaining books of accounts for the relevant period

either manually or electronically. On the basis of such primary

material, self­assessment can be and ought to be done by the

assessee about the eligibility and availing of ITC and of OTL, which
38

is reflected in the periodical return to be filed under Section 59 of

the Act.

36. Section 59 does make reference to Section 39, which deals

with furnishing of returns, but the fact remains that for furnishing

of returns, preparatory work has to be done by the assessee

himself and is not fully or wholly dependent on the common

electronic portal for that purpose. Just couple of weeks before the

relevant period between July and September 2017, the writ

petitioner/respondent No. 1 had been doing that exercise which it

was expected to continue even under the post­GST scheme. The

factum of non­operability of Form GSTR­2A, therefore, is flimsy

plea taken by the writ petitioner/respondent No. 1. Indeed, if the

stated form was operational, the same would have come handy to

the writ petitioner for doing self­assessment regarding eligibility of

ITC and availing thereof. But it is a feeble excuse given by the writ

petitioner/respondent No. 1 to assail the condition specified in

impugned Circular dated 29.12.2017 regarding the rectification of

the return submitted manually in Form GSTR­3B for the relevant

period (July to September 2017).

37. The question of reading down paragraph 4 of the said

Circular would have arisen only if the same was to be in conflict
39

with the express provision in the 2017 Act and the Rules framed

thereunder. The express provision in the form of Section 39(9)

clearly posits that omission or incorrect particulars furnished in

the return in Form GSTR­3B can be corrected in the return to be

furnished in the month or quarter during which such omission or

incorrect particulars are noticed. This very position has been

restated in the impugned Circular. It is, therefore, not contrary to

the statutory dispensation specified in Section 39(9) of the Act.

The High Court, however, erroneously noted that there is no

provision in the Act, which restricts such rectification of the return

in the period in which the error is noticed. It is then noted by the

High Court that as there is no possibility of getting refund of

surplus or excess ITC shown in the electronic credit ledger,

therefore, the only remedy that can enable the writ petitioner to

enjoy the benefit of the seamless utilization of the ITC is by way of

rectification in its annual tax return (Form GSTR­3B) for the

relevant period. Further, the High Court in paragraph 23 of the

impugned judgment, noted that the relief sought in the case before

it, was indispensable. This logic does not commend to us. For, if

there is no provision regarding refund of surplus or excess ITC in

the electronic credit ledger, it does not follow that the assessee
40

concerned who has discharged OTL by paying cash (which he is

free to pay in cash in spite of the surplus or excess electronic

credit ledger account), can later on ask for swapping of the entries,

so as to show the corresponding OTL amount in the electronic

cash ledger from where he can take refund. Payment for discharge

of OTL by cash or by way of availing of ITC, is a matter of option,

which having been exercised by the assessee, cannot be reversed

unless the Act and the Rules permit such reversal or swapping of

the entries. As a matter of fact, Section 39(9) provides for an

express mechanism to correct the error in returns for the month

or quarter during which such omission or incorrect particulars

have been noticed.

38. The entire edifice of the grievance of the writ petitioner

(respondent No. 1) was founded on non­operability of Form GSTR­

2A during the relevant period, which plea having been rejected as

untenable and flimsy, it must follow that the writ

petitioner/respondent No. 1 with full knowledge and information

derived from its books of accounts and records, had done self­

assessment and assessed the OTL for the relevant period and

chose to discharge the same by paying cash. Having so opted, it is

not open to the respondent to now resile from the legal option
41

already exercised. It is for that reason, the respondent has

advisedly propounded a theory that in absence of (electronic­auto

populated record) mechanism made available as per Sections 37

and 38, return filed in Form GSTR­3B is not ascribable to Section

39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules. This

is yet another untenable plea taken by respondent No. 1. For, the

appellant having realized that the mechanism specified in Sections

37 and 38 of the 2017 Act cannot be put in place due to non­

operability of the forms governing such mechanism, had to amend

the rules to make a stop­gap arrangement until the entire

mechanism became operational. Appellant not only amended the

statutory rule but also provided for filing of return manually in

Form GSTR­3B electronically through the common portal with

effect from July 2017. This is manifest from the

circulars/notifications issued from time to time including the

timeline for submitting the returns.

39. It is futile to urge that Section 39(9) has no application to the

fact situation of the present case. In that, allowing filing of return

in Form­GSTR­3B albeit a stop gap arrangement, is ascribable to

Section 39 of the 2017 Act read with Rule 61 of the 2017 Rules.

Indeed, it is not comparable to the mechanism specified for
42

electronically generated Form GSTR­3 referable to Rule 61.

Nevertheless, Form GSTR­3B is prescribed as a “return” to be

furnished by the registered person and by the subsequent

amendment of Rule 61(5) brought into force with effect from

01.01.2017, it has been clarified that such person need not

furnish return in Form GSTR­3 later on. Notably, the validity of

that amendment including that of Notification dated 09.10.2019

bearing No. 49/2019, is not put in issue before us.

40. No doubt, in the initial stages, it was notified that Form

GSTR­3B will be in lieu of Form GSTR­3 but that was soon

corrected by deletion of that expression. At the same time, as the

mechanism for furnishing return in terms of Sections 37 and 38

was not operationalized during the relevant period (July to

September 2017) and became operational only later, the efficacy of

Form GSTR­3B being a stop gap arrangement for furnishing of

return, as was required under Section 39 read with Rule 61,

would not stand whittled down in any manner. It would still be

considered as a return for all purposes though filled manually

electronically.

41. The Gujarat High Court in the case of AAP & Co., Chartered

Accountants through Authorized Partner vs. Union of India &
43

Ors.10, was called upon to consider the question whether the

return in Form GSTR­3B is the return required to be filed under

Section 39 of the 2017 Act. Although, at the outset it noted that

the concerned writ petition had been rendered infructuous but,

went on to answer the question raised therein. It took the view

that Form GSTR­3B was only a temporary stop­gap arrangement

till due date of filing of return Form GSTR­3 is notified. We do not

subscribe to that view. Our view stands reinforced by the

subsequent amendment to Rule 61(5), restating and clarifying the

position that where return in Form GSTR­3B has been furnished

by the registered person, he shall not be required to furnish the

return in Form GSTR­3. This amendment was notified and came

into effect from 01.07.201711 retrospectively. The validity of this

amendment has not been put in issue.

42. The Delhi High Court in the impugned judgment, has taken

note of decision of the Andhra Pradesh High Court in case of

Panduranga Stone Crushers vs. Union of India & Ors. 12 This

decision dealt with the period between July 2017 and March 2018

for the financial year 2017­2018. The petitioner therein had

10 2019-TIOL-1422-HC-AHM-GST
11 Vide Notification/GSR No. 772(E) dated 9th October, 2019
12 2019-TIOL-1975-HC-AP-GST
44

submitted Form GSTR­3B return through GST portal, as required.

While doing so, he had inadvertently and by mistake reported

IGST input tax credit in a column relating to import of goods and

services instead of placing that particular amount, namely, IGST

input tax credit in all other ITC column. The writ petitioner

asserted that he was entitled to rectify such mistake which had

crept in Form GSTR­3B returns. The Union of India had

contended that said situation was covered by Section 39(9) of the

2017 Act and the petitioner could rectify the omission, but did not

avail the chance to rectify or modify the returns. Therefore, he

was not entitled to relief as claimed in the writ petition. The

Andhra Pradesh High Court relied on the decision of the Gujarat

High Court in AAP & Co.13 and the decision of the Kerala High

Court in Saji S. Proprietor, Adithya and Ambadi Traders &

Anr. vs. The Commissioner, State GST Department & Anr. 14,

wherein the Kerala High Court had permitted the request for

transfer of tax liability from the head “SGST” to “IGST”, enabling

the registered person to carry out rectification. The Andhra

Pradesh High Court allowed the petitioner to follow the same suit.

The view taken in these decisions though not assailed before this

13 supra at Footnote No. 10
14 dated 12.11.2018 in W.P.(C) No. 35868/2018
45

Court cannot impact the logic commended to us in this judgment

on the basis of interpretation and application of the relevant

provisions to the facts of this case.

43. The Delhi High Court in the present case then relied on the

decision of the Punjab & Haryana High Court in the case of

Adfert Technologies Pvt. Ltd. vs. Union of India & Ors. 15 In

that case, the petitioner was unable to file return before

31.12.2017 being the extended time due to heavy load upon

accountants, who were having number of assesses, lack of proper

knowledge of computer system, complexity in filling different

columns of TRAN­1 etc. The Punjab & Haryana High Court noted

that GST was an electronic based tax regime and most of people of

India were not conversant with electronic mechanism and not able

to load simple forms electronically. Be it noted that the factum of

inability to access the electronic portal to submit return within the

specified time due to technical faults in the portal is entirely

different than the assertion to grant adjustment of amount

voluntarily paid in cash by the assessee towards OTL. The latter

can be allowed only if the law enacted by the Parliament expressly

permitted such swapping of entries of the electronic credit ledger

vis­a­vis electronic cash ledger; and certainly not permissible in
15 2019-TIOL-2519-HC-P&H-GST
46

the teeth of Section 39(9) of the 2017 Act. Relying on the decision

of the Gujarat High Court in Siddharth Enterprises vs. The

Nodal Officer16, however, the Court noted that denial of credit of

tax/duty paid under existing Acts would amount to violation of

Article 14 and 300A of the Constitution of India. It noted that

unutilized credit has been recognized as vested right and property

in terms of Article 300A of the Constitution. This decision was on

facts of that case concerning erroneous entry recorded in Form

GSTR­3B and not regarding right asserted to swap the mode of

payment of OTL in cash to be adjusted against electronic credit

ledger as in the present case in the guise of rectification of return

filed in Form GSTR­3B for the earlier period.

44. Reference was then made to decision of this Court in MRF

Ltd., Kottayam vs. Asstt. Commissioner (Assessment), Sales

Tax & Ors.17, wherein it is held that a person may have a

legitimate expectation of being treated in a certain way by an

administrative authority, even though he has no legal right in

private law to receive such treatment. The High Court then

referred to the decision of Delhi high Court in Krish Authomotors

16 2019-TIOL-2068-HC-AHM-GST
17 (2006) 8 SCC 702
47

Pvt. Ltd. vs. Union of India & Ors.18, which had permitted the

writ petitioners to either submit the TRAN­I form electronically by

opening the electronic portal or to tender the said form manually

before the specified date and thereafter to process the claim for

ITC in accordance with law. The Punjab & Haryana High Court

agreed with the view taken by the Gujarat High Court and the

Delhi High Court. The conclusion so recorded by the Punjab &

Haryana High Court will have no bearing on the facts of this case

in light of the opinion expressed in this judgment, as we have held

that consequent to submission/filing of Form GSTR­3B, as

envisaged by the 2017 Act, it can be rectified only in the manner

specified in Section 39(9) read with Rule 61(5), as applicable at the

relevant time. In other words, the rectification can be done only in

the return to be furnished in the month or quarter during which

such omission or incorrect particulars are noticed and not in the

return for the period to which it relates.

45. The High Court in the impugned judgment, has also adverted

to the decisions of the Delhi High Court in Blue Bird Pure Pvt.

Ltd. vs. Union of India & Ors. 19 and in Lease Plan India

Private Limited vs. Government of National Capital Territory

18 2019-TIOL-2153-HC-DEL-GST
19 2019 SCC OnLine Del 9250
48

of Delhi & Ors.20 For the same reasons, the conclusion reached

in the said two decisions will be of no avail to respondent No. 1.

46. We need not multiply the authorities referred to in the

concerned judgments, and cited before us, as in our opinion, these

decisions have not dealt with the cardinal aspect of statutory

obligation fastened upon the registered person to maintain books

of accounts and record within the meaning of Chapter VII of the

2017 Rules, which are primary documents and source material on

the basis of which self­assessment is done by the registered

person including about his eligibility and entitlement to get ITC

and of OTL. Form GSTR­2A is only a facilitator for taking an

informed decision while doing such self­assessment. Non­

performance or non­operability of Form GSTR­2A or for that

matter, other forms, will be of no avail because the dispensation

stipulated at the relevant time obliged the registered person to

submit returns on the basis of such self­assessment in Form

GSTR­3B manually on electronic platform. The provision

contained in Section 39(9) of the 2017 Act and Rule 61 of the

Rules framed thereunder, as applicable at the relevant time, apply

with full vigor to the returns filed by the registered person in Form

GSTR­3B.

20 decided on 13.9.2019 in W.P.(C) No. 3309/2019
49

47. Significantly, the registered person is 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 are 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.

48. A priori, despite such an express mechanism provided by

Section 39(9) read with Rule 61, 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 self­assessment return filed

electronically. 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.

49. As noted earlier, the matching and correction process

happens on its own as per the mechanism specified in Sections 37

and 38, after which Form GSTR­3 is generated for the purposes of

submission of returns; and once it is submitted, any changes

thereto may have cascading effect. Therefore, the law permits

rectification of errors and omissions only at the initial stages of
51

Forms GSTR­1 and GSTR­3, but in the specified manner. It is a

different dispensation provided than the one in pre­GST period,

which did not have the provision of auto­populated records and

entries.

50. Suffice it to conclude that the challenge to the impugned

Circular No. 26/26/2017­GST dated 29.12.2017, is unsustainable

for the reasons noted hitherto. We hold that stipulations in the

stated Circular including in paragraph 4 thereof, are consistent

with the provisions of the 2017 Acts and the Rules framed

thereunder. Having said that, it must follow that there is no

necessity of reading down paragraph 4 of the impugned Circular

as has been done by the High Court vide impugned judgment. 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.

51. No other issue has been dealt with by the High Court except

to read down of the stated Circular, which as aforesaid, is wholly

unnecessary.

52. In view of the above, this appeal is allowed. The impugned

judgment and order is set aside. Resultantly, the writ petition
52

filed by respondent No. 1 before the High Court stands

dismissed. There shall be no order as to costs.

All applications stand disposed of.

………………………………J.

(A.M. Khanwilkar)

………………………………J.

(Dinesh Maheshwari)
New Delhi;

October 28, 2021.



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