HC directs Revenue to deal with bona fide errors in GSTR-1 for FY 2019-20 in accordance with the clarification issued by CBIC for FY 2017-18 and 2018-19

This Tax Alert summarizes a recent ruling[1] of the Karnataka High Court (HC) dealing with bona fide mistakes in GSTR-1 while furnishing details of the recipient.

In the given case, assessee had inadvertently furnished incorrect GSTIN of the recipient in GSTR-1 for the financial years (FY) 2017-18 to 2019-20. Consequently, it filed a writ petition before the HC seeking direction to Revenue to allow rectification of GSTR-1, so that the recipient can claim input tax credit (ITC).

Earlier, Central Board of Indirect Taxes & Customs (CBIC) had issued clarification vide Circular[2] to deal with cases where ITC availed in GSTR-3B is different from the amount reflected in GSTR-2A for FY 2017-18 and 2018-19 due to inter-alia incorrect details furnished by the supplier in GSTR-1.

HC observed that the language employed in the Circular contemplates rectification of bona fide and inadvertent mistakes committed by the persons at the time of filing and submitting returns. Therefore, the same would be directly and squarely applicable to the facts of the present case.

Though the Circular refers only to the FY 2017-18 and 2018-19, since there are identical errors committed by assessee in FY 2019-20, by adopting a justice-oriented approach, assessee would be entitled to the benefit of the Circular for the said year.

Basis above, HC allowed the writ petition directing Revenue to take necessary steps in relation to transactions for FY  2017-18 to 2019-20, in accordance with the Circular.

Comments:

The ruling is likely to resolve the ambiguity regarding the applicability of the Circular to FY 2019-20, particularly for the period prior to introduction of Rule 36(4) of the Central Goods and Services Tax Rules, 2017.

[1] 2023-VIL-22-KAR
[2] Circular No. 183/15/2022-GST dated 27 December 2022