Title: High Court Declines Post-Deadline GST Amendments: Lessons for Businesses (Insights from Barcode India Ltd. Case in Punjab & Haryana High Court)
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Case No: CWP No. 25343 of 2023 (O&M) dated 14/11/2024
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Parties and Basic Details
?????? i.????????? Petitioner: BARCODE INDIA LIMITED (GSTIN: 06AAACB2892A1Z5) (Petitioner) (Seller)
???? ii.????????? Respondents: Union of India and others (Revenue/Department)
??? iii.????????? FedEx Express Transportation & Supply Chain Services (India) Private Limited (Receiver of GST ITC i.e. Purchaser)
??? iv.????????? Issue: Whether the petitioner i.e. Seller could rectify/amend the GST number of a purchaser in GSTR-1 for invoices raised in May 2021, after the statutory timeline for corrections had expired. Petitioner company (BARCODE INDIA LIMITED) issued three invoices to the purchaser (FedEx) for financial year 2021-2022 where erroneously at the time of filing of GSTR-1 return, the petitioner company made certain inadvertent errors by mentioning the point of sale as Mumbai instead of Delhi and also mentioned the GST number of the receiver/ purchaser of Mumbai instead of GST number of the purchaser in Delhi.
????? v.????????? Invoice Issued on FY 2021-2022, 13.05.2021 total of Three Invoices
??? vi.????????? Actual Place of Supply: Delhi having Delhi GSTIN no of FedEx
? vii.????????? Wrong Place of Supply: Mumbai having Mumbai GSTIN no of FedEx
?viii.????????? Important Section of GST Act, 2017 cited in Judgement: Section 16 (4); Sections 37 (1); 37 (3) and 39 and 44 of the Act
Brief of the case and
1.????? Purchaser notified the error to them (Barcode India) somewhere in the month of April 2023 as they found difficulty to avail GST input tax credit.
2.????? Petitioner sent letter dated 18-08-2023 to Respondent i.e. Revenue praying for allowing them to make necessary amendments in their return relating to the three invoices issued on 13.05.2021.
3.????? Revenue (Department), however, rejected the prayer i.e. Barcode India Ltd. On account of being no provision to make amendments after the time period laid down under rules has expired.
4.????? Revenue, clarifies that last date for rectification of error or omission in terms of Section 37(3) of the Act for the A. Y. 2021-2022 was 30.11.2022. Department also argued that the petitioner ought to have been cautioned enough in checking its monthly returns and prior to filing of annual return, it could have easily rectified in GSTR-1 as the common portal allows rectification of such errors till the filing of annual return.
5.????? ITC claims by the purchaser were also time-barred under Section 16(4) of the CGST Act as there is no benefit of amending the Invoices.
6.????? Department also argued that Allowing amendments beyond the deadline would disrupt the tax framework and have cascading effects.
7.????? Learned counsel for the respondents further submits that the issue as raised in the present petition stands finally adjudicated by Hon’ble the Supreme Court in Union of India (UOI) vs Bharti Airtel Limited and others (2022) 4 SCC 328.
In the Above cited case of Bharti Airtel Limited, Hon’ble the Supreme Court cited Section 16 of the Act and held as under: -
“48. A priori, despite such an express mechanism provided by Section 39(9) read with Rule 61, it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assessee to enjoy the benefit of the seamless utilization of the input tax credit is by way of rectification of its return submitted in Form GSTR3-B for the relevant period in which the error had occurred. Any unilateral change in such return as per the present dispensation, would have cascading effect on the recipients and suppliers associated with the concerned transactions. There would be complete uncertainty and no finality could ever be attached to the self-assessment return filed electronically. We agree with the submission of the appellant that any indulgence shown contrary to the statutory mandate would not only be an illegality but in reality, would simply lead to chaotic situation and collapse of tax administration of Union, States and Union Territories. Resultantly, unilaterally carry out assessee cannot be permitted to rectification of his returns submitted electronically in Form GSTR-3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.
?49.?????????? As noted earlier, process happens on its the matching and correction own as per the mechanism specified in Sections 37 and 38, after which Form GSTR- 3 is generated for the purposes of submission of returns; and once it is submitted, any changes thereto may have cascading effect. Therefore, the law permits rectification of errors and omissions only at the initial stages of Forms GSTR-1 and manner. It is a different GSTR-3, but in the specified dispensation provided than the one in pre-GST period, which did not have the provision of auto-populated records and entries.”
8.????? Court stated that as soon as the supplier files GSTR-1 mentioning the Invoice amount, date, rate, place of supply and the GST Number of buyer, the system automatically generate GSTR-2A of the recipient of the goods/services, which is one of the basic elements for claiming ITC through GSTR-3B.
9.????? Court also states that as per section 16(4) of the Act, registered person shall not be entitled to take ITC of any goods or services after the due date of furnishing of the return under section 39 of the Act of the month of September following the end of the financial year to which such invoice or debit not pertains or furnishing of the relevant annual return, whichever is earlier.
10.?? Thus, ITC can be availed till the due date of furnishing of the return. If there is a correction in the corresponding GSTR-1 within the timeline, ITC would be permissible in terms of the timeline specified in Section 64 of the Act, therefore, the petitioner cannot be permitted to rectify the return beyond the statutory time limit prescribed under the GST Act. Even if the petitioner is allowed to rectify the return now, there will not be an automatic benefit of input tax credit, which the purchaser can claim. Had the petitioner detected this error prior to filing of annual return, it could have simply rectified the same in the GSTR-1 for that month as the common portal allows rectification of such error till the filing of the annual return.
11.?? Court has also clarified that merely because of an error being committed by a particular company, which causes loss to the purchaser company, the provisions of the Act need not be interpreted to suit them. The law is settled that a person who is engaged in business has to be well versed with the provisions of law including the time frame provided under the said provisions. Both the companies, long and if as asserted by the respondents, they have committed an error, are engaged in business since the law cannot be changed for giving them any such benefit.
12.?? The High Court accordingly rejected the claim of the petitioner for correction of the return. The writ petition is found to be without any force and is accordingly dismissed.
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Opinion: The cascading structure of GST means interconnected nature of GST returns and their impact on related parties across the supply chain. Cascading Structure has the sequential process of returns i.e. data entered in GSTR-1 by the supplier automatically reflects in GSTR-2A of the buyer and buyer uses the data of GSTR-2A to claim Input Tax Credit (ITC) in GSTR-3B for discharging their tax liability for any particular month. If any errors occur in GSTR-1 (e.g., incorrect GSTIN or place of supply), the same errors reflect to GSTR-2A of the buyer and These errors can prevent the buyer from claiming ITC, leading to financial loss or compliance challenges. Another important point of cascading structure is the time frame of GST Law and rules as any retrospective changes in GSTR-1 would change the data of GSTR-2A and GSTR-3B for multiple parties. GST compliance within the time frame stated in the law aims to bring certainty, finality of records and closure within a fixed period for everyone. Reopening past data can creates administrative chaos among various stakeholder and it will become never ending process.
Suggestion:
1.????? Make sure you are filing accurate GST returns to avoid long-term business disruptions.
2.????? Use automated software to avoid errors in GST filings.
3.????? Conduct monthly or quarterly or half yearly or at least annual reconciliation of returns depending upon the size of business.
4.????? Conduct Periodic reviews of all the details before filing returns to detect discrepancies early.
5.????? Also, company need to train their teams on compliance and implications of the GST Act, so that they can avoid any big mistakes.
6.????? Hire good consultants to meet statutory deadlines and cross check the systems.
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Overview of section and links for ready reference.
A.??? Section 10 of CGST Act, 2017 specifies the basic requirement towards eligibility and applicability of the Composition scheme in Chapter III (Levy and collection of Tax)
B.???? Section 16 deals with “Eligibility and conditions for taking input tax credit” in chapter V (Input Tax Credit)
C.???? Section 37 deals with “Furnishing details of Outward Supplies” in Chapter IX (Returns) (Tip: GSTR-1) (Link: https://www.cggst.com/wp-content/uploads/2020/06/Section-37-1.pdf )
D.??? Section 39 deals with “Furnishing of returns” in Chapter IX (Returns) (Tip: GSTR-3B) (Link: https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_CGST_act/active/chapter9/section39_v1.00.html )
E.???? Section 44 deals with “Annual Return” in Chapter IX (Returns) (GSTR-9 and 9C)
F.???? Section 51 deals with “Tax deduction at source” in Chapter X (Payment of Tax)
G.??? Section 52 deals with “Collection of tax at source” in Chapter X (Payment of Tax)
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