HC allows rectification of GSTR-3B after expiry of statutory time limit

This Tax Alert summarizes a recent ruling of Karnataka High Court (HC) allowing rectification of GST returns with respect to availment of input tax credit (ITC) for the month of July 2017 and March 2018.

The petitioner had inadvertently considered integrated tax (IGST) paid on imports as other IGST in July 2017 and as central tax (CGST) and state tax (SGST) in March 2018. This error resulted in a mismatch between the GSTR-3B and GSTR-2A.

During audit, Revenue sought to disallow such ITC. The petitioner requested to rectify these errors by submitting a revised table in GSTR-3B, but the same was rejected on the ground that such rectification had become time-barred.

HC observed that the authorities must avoid a blinkered view while adjudicating/ assessing the tax liability of a dealer. 

Revenue has, in the absence of GSTR-2A, referred to the IGST import figures reflected on ICEGATE portal for all the months except those in which the errors have been committed. 

This clearly indicates that the Revenue is aware of the actual figures and also that there is an error committed by the petitioner, but has chosen to selectively ignore the IGST import amounts reflected on ICEGATE portal for the tax periods in dispute.

HC noted that there cannot be said to be any cascading effect, since the petitioner only seeks to shift the ITC already claimed from one head to another.

Accordingly, HC held that the petitioner is entitled to make the necessary changes in GSTR-3B returns for July 2017 and March 2018.

Comments:

While the HC allowed rectification beyond statutory time limit with a rider that the ruling shall not have any precedential value, taxpayers who have committed similar errors in the initial phase of introduction of GST may rely on this judgement to counter denial of ITC by the department.

The Government may consider issuing a Circular allowing taxpayers to belatedly rectify such mistakes where there is no revenue implication.