In a major relief to Wipro and ABB Global Services, the Karnataka High Court in its recent ruling has held that the input tax credit blocked due to bonafide mistakes in GSTR-1 for the FY 2017-18 to FY 2019-20 can be given as per procedure laid down in the recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC).
The petitioner-Company M/s Wipro Limited relied on the Circular No.183/15/2022-GST dated 27.12.2022 and contended that the petitioner as well as the recipient of supply M/s.ABB Global Industries and Services Private Limited would be entitled to the benefit of the directions issued in the said Circular with regard to the errors committed in the Invoices.
The High Court observed that a perusal of the Invoices indicated that while supplies are made by the petitioner to M/s.ABB Global Industries and Services Private Limited, the GSTIN Number mentioned in the Invoices has been incorrectly shown as that of ABB India Limited, which is a completely different and independent juristic and legal entity from the latter.
The Court stated in its order that under these circumstances, having regard to the language employed in the Circular, which contemplates rectification of the bonafide and inadvertent mistakes committed by the persons at the time of filing of Forms and submitting Returns, in the peculiar and special facts and circumstances of the instant case, I am of the considered opinion that the error committed by the petitioner in showing the wrong GSTIN number in the Invoices which was carried forward in the relevant Forms as that of ABB India Limited instead of the 5th respondent i.e., M/s.ABB Global Industries and Services Private Limited, is clearly a bonafide error, which has occurred due to bonafide reasons, unavoidable circumstances, sufficient cause and consequently, the aforesaid Circular would be directly and squarely applicable to the facts of the instant case.
Concluding the order, the High Court adjudged that a perusal of the aforesaid Circular also indicates that the procedure to be followed in such cases has been prescribed at paragraph-4. In addition to the Circular, the petitioner has also filed an Affidavit satisfying the conditions stipulated in paragraph – 4.1.1 of the Circular, enclosing the details of the Invoices issued by the petitioner to the 5th respondent. The 5th respondent has filed statement of objections setting out the facts admitting, accepting and reenforcing the claim of the petitioner with regard to the discrepancies / mismatch in mentioning of the GSTIN Number.
Granting relief to Wipro, the High Court held that it would be just and proper to dispose of this petition directing the Revenue to follow the procedure prescribed in the Circular and apply the said Circular to the facts of the instant case of the petitioner, recipient of supply and their transactions for the years 2017-18, 2018-19 and 2019-20. It was also stated that though the Circular refers only to the years 2017-18 and 2018-19, since there are identical errors committed by the petitioner not only in respect of the assessment years 2017-18 and 2018-19 but also in relation to the assessment year 2019-20 also, the petitioner would be entitled to the benefit of the Circular for the year 2019-20 also.
For ready reference of our readers, the Paragraph 4 of the Circular No.183/15/2022-GST dated 27.12.2022 is reproduced as under:
The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A. He shall then ascertain fulfillment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed on such invoices by the said registered person:
i) that he is in possession of a tax invoice or debit note issued by the supplier or such other tax paying documents;
ii) that he has received the goods or services or both;
iii) that he has made payment for the amount towards the value of supply, along with tax payable thereon, to the supplier.
Besides, the proper officer shall also check whether any reversal of input tax credit is required to be made in accordance with section 17 or section 18 of CGST Act and also whether the said input tax credit has been availed within the time period specified under sub-section (4) of section 16 of CGST Act.
4.1 In order to verify the condition of clause (c) of sub-section (2) of Section 16 of CGST Act that tax on the said supply has been paid by the supplier, the following action may be taken by the proper officer:
4.1.1 In case, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year exceeds Rs 5 lakh, the proper officer shall ask the registered person to produce a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA), certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR 3B. Certificate issued by CA
or CMA shall contain UDIN. UDIN of the certificate issued by CAs can be verified from ICAI website https://udin.icai.org/search-udin and that issued by CMAs can be verified from ICMAI website https://eicmai.in/udin/VerifyUDIN.aspx .
4.1.2 In cases, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year is upto Rs 5 lakh, the proper officer shall ask the claimant to produce a certificate from the concerned supplier to the effect that said supplies have actually been made by him to the said registered person and the tax on said supplies has been paid by the said supplier in his return in FORM GSTR 3B.
4.2 However, it may be noted that for the period FY 2017-18, as per proviso to section 16(4) of CGST Act, the aforesaid relaxations shall not be applicable to the claim of ITC made in the FORM GSTR-3B return filed after the due date of furnishing return for the month of September, 2018 till the due date of furnishing return for March, 2019, if supplier had not furnished details of the said supply in his FORM GSTR-1 till the due date of furnishing FORM GSTR 1 for the month of March, 2019.
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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.
