The Supreme Court has in a recent judgment in the case of Union of India & Ors. v. AAP and Company reversed the judgment of the Gujarat High Court, and has ruled that FORM GSTR-3B is a return under Section 39 of the CGST Act,2017.
It is pertinent to mention here that, the Gujarat High Court in AAP and Co. v. Union of India vide order dated 24th June 2019 had held that, Form GSTR-3B is not a return under Section 39 of the CGST Act and it is only a temporary stop gap arrangement till due date of filing the return in Form GSTR-3 is notified.
The High Court in said order had held that the press release dated 18th October 2018 could be said to be illegal to the extent that its para-3 purports to clarify that the last date for availing input tax credit relating to the invoices issued during the period from July 2017 to March 2018 is the last date for the filing of return in Form GSTR-3B.
The said clarification was held to be contrary to Section 16(4) of the CGST Act/GGST Act read with Section 39(1) of the CGST Act/GGST Act read with Rule 61 of the CGST Rules,2017.
However, the Supreme Court noted that judgment in AAP and Co. has been expressly overruled by a three-Judge Bench by the decision of the Supreme Court in Union of India v. Bharti Airtel Ltd. & Ors., [Civil Appeal No.6520 of 2021 dated 28th October 2021]
Accordingly, the Supreme Court held that the appeal succeeds on the same terms as in Bharti Airtel Ltd. & Ors. (ibid) and thus held that FORM GSTR-3B is a return under Section 39 of the CGST Act,2017 overruling the Gujarat High Court judgment.
Our View:
In our view the issue in the Bharti Airtel Ltd. & Ors. was entirely different from that of AAP and Co. as the constitutionality of amendment in Rule 61(5) of the CGST Rules,2017 made vide Notification No. 49/2019 – Central Tax dated 9th October 2019 w.e.f. 1st July 2017 was not challenged in Bharti Airtel Ltd. & Ors. Rather the issue before the Supreme Court in Bharti Airtel Ltd. & Ors. was whether Form GSTR- 3B can be allowed to be rectified or not on which Supreme Court disallowed the assessee to unilaterally carry out rectification of his returns submitted electronically in Form GSTR-3B, and it would inevitably affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.
The observations made in the Bharti Airtel Ltd. & Ors. in respect to Form GSTR-3B being a return or not isn’t the ratio decidendi but the obiter dictum. Accordingly, a question may arise as to whether the Supreme Court in its current judgment in AAP and Co. can rely entirely on the obiter dictum of Bharti Airtel Ltd. & Ors. to overrule the judgment given by the Gujarat High Court.
Further, the judgment of the Supreme Court nowhere discusses the crucial aspect of substitution of rule 61(5), retrospectively w.e.f. 1st July 2017, categorizing GSTR-3B as a return u/s 39 of CGST Act, vide Notification No.49/2019-CT dated 9th October 2019 , after delivery of the judgment of Gujarat HC dated 24th June 2019 nor commented upon this subsequent amendment by CBIC, before overruling the judgment of Gujarat HC. It is pertinent to mention here that the CBIC vide Notification dated 9th October 2019 had amended Rule 61(5) to nullify the judgment of Gujarat HC in AAP & Co.
Full Text of Supreme Court Judgment:
This appeal takes exception to the judgment and order dated 24.6.2019 passed by the High Court of Gujarat at Ahmedabad in Special Civil Application No.18962 of 2018.
This judgment has been expressly overruled by a three-Judge Bench decision of this Court in Civil Appeal No.6520 of 2021 titled Union of India vs. Bharti Airtel Ltd. & Ors., reported in (2021) 13 SCALE 301.
Learned counsel for the respondent was at pains to persuade us that the three-Judge Bench judgment can be distinguished, without realising that the three-Judge Bench judgment expressly overrules the impugned judgment. In such a case, the argument of distinguishing the three-Judge Bench judgment is not available.
The note submitted by the respondent is taken on record only to be rejected.
The appeal succeeds on the same terms as in Civil Appeal No.6520 of 2021 titled Union of India vs. Bharti Airtel Ltd. & Ors., reported in (2021) 13 SCALE 301. The civil appeal is disposed of in the above terms. Pending applications, if any, stand disposed of.
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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.
