The Madras High Court has reaffirmed that taxpayers cannot be denied the opportunity to correct genuine clerical and arithmetical errors in GST returns merely due to technical limitations of the GST portal.
The bench of Justice G. Jayachandran and Justice N. Mala has dismissed an appeal filed by the Central GST Department and directed authorities to permit rectification of GSTR-1 returns that had resulted in denial of Input Tax Credit (ITC) to recipients.
The dispute arose from a taxpayer’s request to rectify errors in GSTR-1 statements filed for August 2017, November 2017, December 2017 and January 2018. Due to mistakes in the uploaded returns, Input Tax Credit amounting to approximately ₹23.39 lakh could not be reflected correctly, adversely affecting the recipients entitled to claim such credit.
The taxpayer approached the GST authorities seeking permission to amend the returns. However, the request was rejected on the ground that it was filed belatedly and that there was no statutory provision permitting such rectification after the prescribed period. Aggrieved by the rejection, the taxpayer filed a writ petition before the Madras High Court.
The Single Judge, while deciding the writ petition, relied on earlier judicial precedents including Sun Dye Chem v. Assistant Commissioner and Pentacle Plant Machineries Pvt. Ltd. v. Office of the GST Council. The Court held that genuine mistakes in GST returns should be permitted to be corrected and directed the Department to enable the taxpayer to upload rectified GSTR-1 statements within four weeks.
Challenging this direction, the Department filed an intra-court appeal before the Division Bench.
After examining the grounds raised by the Department, the Division Bench observed that the appeal lacked merit and noted that an identical issue had already been settled by a Coordinate Bench of the High Court in Principal Chief Commissioner of GST and Central Excise v. Deepa Traders.
The Court referred to earlier judgments permitting rectification of GST returns and also took note of observations made by the Supreme Court while dismissing a Special Leave Petition against a Bombay High Court judgment in the case of Aberdare Technologies Pvt. Ltd.. The Supreme Court had emphasized that the right to correct clerical or arithmetical mistakes flows from the fundamental right to carry on business and should not be denied without compelling reasons. It had further observed that software limitations cannot be a valid justification for denying such corrections because technology is intended to facilitate compliance rather than obstruct it.
The Bench dismissed the Department’s appeal and directed the authorities to enable the taxpayer to upload the corrected GSTR-1 statements within four weeks. The Court further ordered that once the rectified returns are uploaded, the Department must process the matter appropriately and ensure that eligible recipients receive the Input Tax Credit to which they are entitled.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
