Supreme Court order on GSTR 3B Rectification

Facts of the Case

Forms GSTR-2 and 3 could not be operationalized by the Government, the Government introduced Rule 61(5) (which was amended vide Notification No. 17/2017-Central Tax, dated 27-7-2017) and the Rule 61(6) in the CGST Rules, and provided for filing of monthly return in Form GSTR-3B which is only a summary return.

Taxpayer paid excess GST through e-cash ledger , whereas when GSTR 2A become operational in September 2018 , he noticed that he has sufficient balance of Input Tax credit in GSTR 2A .

Delhi High Court allowed rectification of Form GSTR3B in respect of period in which the error had occurred

The High Court also allowed respondent to rectify Form GSTR-3B for the period in which error had occurred, i.e., from July to September 2017.

Decision of Supreme Court

ITC to be claimed based on Books of Account

The registered person is obliged to maintain accounts and records as envisaged under Chapter VII of the 2017 Rules. That ought to be the basis for self-assessment of Output Tax Liability in the first place. On the basis of the facts and figures emanating from such records, the registered person can collate the relevant information regarding entitlement to avail ITC collected from supplier of goods or services or for both which are used or intended to be used in the course of furtherance of his business.

During the pre-GST regime, the writ petitioner (being registered person/assessee) had been maintaining such books of accounts and records and submitting returns on its own. No such auto-populated electronic data was in vogue. It is the same pattern which had to be followed by the registered person in the post-GST regime.

The common portal is only a facilitator to feed or retrieve such information and need not be the primary source for doing selfassessment.

The primary source is in the form of agreements, invoices/challans, receipts of the goods and services and books of accounts which are maintained by the assessee manually/electronically. These are not within the control of the tax authorities. This was the arrangement even in the pre-GST regime whilst discharging the obligation under the concerned legislation(s). The position is no different in the post-GST regime, both in the matter of doing self-assessment and regarding dealing with eligibility to ITC and OTL. Indeed, that self-assessment and declarations would be any way subject to verification by the tax authorities. The role of tax authorities would come at the time of verification of the declarations and returns submitted/filed by the registered person.

Preparatory work has to be done by the assessee himself and is not fully or wholly dependent on the common electronic portal for that purpose.

Error Correction in month in which it is noticed

Any rectification regarding omission or incorrect particulars referred to therein, could be furnished in the month or quarter during which such omission or incorrect particulars came to be noticed

The fact that respondent No.1 would not be eligible to get refund of cash also, cannot be the basis to permit the registered person to swap the entry in the electronic cash ledger with the entry in the electronic credit ledger or vice versa. No such mechanism has been provided in the 2017 Act or the Rules framed thereunder. If permitted, even as one of the cases because of non-operability of the forms at the relevant time, may result in chaotic situation and collapse of the tax administration of the Union, States and the Union Territories.

GSTR 2A is facilitator

The common portal is only a facilitator to feed or retrieve such information and need not be the primary source for doing selfassessment.

The factum of non-operability of Form GSTR-2A, therefore, is flimsy plea taken by the writ petitioner/respondent No. 1

Form GSTR-2A is only a facilitator for taking an informed decision while doing such self-assessment. Nonperformance or non-operability of Form GSTR-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self-assessment in Form GSTR-3B manually on electronic platform. The provision contained in Section 39(9) of the 2017 Act and Rule 61 of the Rules framed thereunder, as applicable at the relevant time, apply with full vigor to the returns filed by the registered person in Form GSTR-3B.

Option to Pay by cash  or Electronic Credit Ledger

Suffice it to observe that the registered person is expected to exercise the option of utilizing ITC or to pay by cash for discharging his OTL at the time of filing of return on the information gathered from the primary record in his possession

Payment for discharge of OTL by cash or by way of availing of ITC, is a matter of option, which having been exercised by the assessee, cannot be reversed unless the Act and the Rules permit such reversal or swapping of the entries

The assessee concerned who has discharged OTL by paying cash (which he is free to pay in cash in spite of the surplus or excess electronic credit ledger account), can not later on ask for swapping of the entries, so as to show the corresponding OTL amount in the electronic cash ledger from where he can take refund.

it must follow that the writ petitioner/respondent No. 1 with full knowledge and information derived from its books of accounts and records, had done selfassessment and assessed the OTL for the relevant period and chose to discharge the same by paying cash. Having so opted, it is not open to the respondent to now resile from the legal option already exercised. It is for that reason, the respondent has advisedly propounded a theory that in absence of (electronic-auto populated record) mechanism made available as per Sections 37 and 38, return filed in Form GSTR-3B is not ascribable to Section 39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules.

Thus, it is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in the electronic credit ledger, the registered person opts to discharge OTL by paying cash. That is a matter of option exercised by the registered person on which the tax authorities have no control, whatsoever, nor they have any role to play in that regard. Further, there is no express provision permitting swapping of entries effected in the electronic cash ledger vis-a-vis the electronic credit ledger or vice versa.