The Hon’ble Madras High Court has recently in the case of M/s. Sun Dye Chem v. The Assistant Commissioner [W.P. No. 29676 of 2019] has held that absence of enabling provision cannot jeopardize taxpayer from availing credit that they are entitled to, while allowing them to rectify and correct Form GSTR-1 for the period August 2017 to December 2017 and redistribute the credit available from IGST column to CGST and SGST fields. Thus rectification of GSTR-1 for past period which is otherwise time barred has been allowed by the Court.
Facts of the Case:
- The M/s. Sun Dye Chem (“Petitioner”) filed the monthly return for the period August 2017 to December 2017 in the GST portal in Form GSTR-3B. The returns were accompanied by annexures in Form GSTR-1 that reflected CGST, SGST and IGST. There was however, an inadvertent error in reporting in Form GSTR-1 in regard to the outward supplies and as a result, Intra-state sales had been erroneously reported as inter-state sales.
- The error was noticed by the Petitioner when its customers brought to its notice the fact that the tax credit has been reflected in the IGST column instead of CGST/SGST columns posing a difficulty to the customers to avail the said credit.
- The Petitioner submitted a request for amendment of Form GSTR-1 that came to be rejected on August 12, 2019 on the ground that there was no provision to grant the amendment sought, in any event, not after March 31, 2019 as Notification No. 71/2018- Central Tax dated December 31, 2018 had extended the time for submission of the amended GSTR-1 till March 31, 2019, for the period 2017-18. The Petitioner was thus unable to correct the error.
Issue raised before the Hon’ble Court
Whether the Petitioner be permitted rectify Form GSTR-1 for the period August 2017 to December 2017 and redistribute the credit available from the IGST column to the CGST and SGST fields?
Order of Madras High Court on rectification of GSTR-1: Deliberation and Ruling
- A registered person who files a return under Section 39(1) of the CGST Act involving intra-State outward supply is to indicate the collection of taxes customer-wise in monthly return in Form GSTR-1 and the details of tax payment therein are auto populated in Form GSTR -2-A of the buyers. Any mismatch between Form GSTR-1 and Form GSTR-2A is to be notified by the recipient by way of a tabulation in Form GSTR-1A. Admittedly, Forms in GSTR-2A and GSTR-1A are yet to be notified as on date. The statutory procedure contemplated for seamless availment is, as on date, unavailable.
- The Petitioner in this case has committed an error in filing of the details relating to credit. What should have figured in the CGST/SGST column has inadvertently been reflected in the IGST column. It is nobody’s case that the error was deliberate and intended to gain any benefit, and in fact, by reason of the error, the customers of the Petitioner will be denied credit which they claim to be legitimately entitled to, owing to the fact that the credits stands reflected in the wrong column. It is for this purpose, to ensure that the suppliers do not lose the benefit of the credit, that the present writ petition has been filed.
- Admittedly, the March 31, 2019 was the last date by which rectification of Form – GSTR 1 may be sought. However, and also admittedly, the Forms, by filing of which the Petitioner might have noticed the error and sought amendment, viz. GSTR-2A and GSTR-1A are yet to be notified. Had the requisite Forms been notified, the mismatch between the details of credit in the Petitioner’s and the supplier’s returns might well have been noticed and appropriate and timely action taken. The error was noticed only later when the Petitioners’ customers brought the same to the attention of the Petitioner.
- In the absence of an enabling mechanism, Assessees should not be prejudiced from availing credit that they are otherwise legitimately entitled to. The error committed by the Petitioner is an inadvertent human error and the Petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute.
In view of above deliberations the Madras High Court allowed the writ petition and set aside the impugned order. Accordingly the petitioner is permitted to re-submit the annexures to Form GSTR-3B with the correct distribution of credit between IGST, SGST and CGST within a period of four weeks from date of uploading of this order and the respondents shall take the same on file and enable the auto-population of the correct details in the GST portal.
READ / DOWNLOAD ORDER:
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
