Facts of the Case

Star Engineers (I) Pvt. Ltd., a manufacturer and supplier of electronic components regularly supplying to Bajaj Auto Limited (BAL) under a Bill-to-Ship-to arrangement, inadvertently mentioned the GSTIN of third-party consignees instead of BAL in Form GSTR-1 for July 2021, November 2021 and January 2022. Consequently, the invoices reflected in the vendors' GSTR-2B instead of BAL's, causing BAL to lose eligibility to claim input tax credit and to deduct the corresponding GST amount from payments due to the petitioner. On discovering the error in November 2022, the petitioner sought permission to rectify Form GSTR-1, but the Deputy Commissioner of State Tax, by communication dated 27.09.2023, rejected the request as time-barred under the GST Act, despite acknowledging that there was no loss of revenue to the exchequer.

Issues Involved

  1. Whether the proviso to Section 37(3) and Section 39(9) of the CGST/MGST Act, which bars rectification of GSTR-1 after a prescribed cut-off date, precludes correction of a bona fide, inadvertent, revenue-neutral clerical error.

Petitioner's Arguments

  • The rejection was arbitrary since it was undisputed that there was no loss of revenue to the Government.
  • Technicalities in the GST Portal's cut-off should not defeat substantive justice for an inadvertent human error.
  • Relied on Sun Dye Chem v. Assistant Commissioner (ST), Pentacle Plant Machineries v. GST Council, Shiva Jyoti Construction v. Chairperson, CBEC (Orissa HC) and Mahalaxmi Infra Contract Ltd. v. GST Council (Jharkhand HC), all of which permitted rectification of similar bona fide errors.

Respondent's Arguments

  • The provisions of the GST Act did not permit the State Tax Officer to accept a rectification request beyond the statutory cut-off, irrespective of the underlying facts.
  • However, the Revenue fairly conceded that accepting the petitioner's request would cause no loss of revenue to the exchequer.

Court Order / Findings

  • Sections 37(3) and 39(9) of the CGST/MGST Act, read with their provisos, require purposive interpretation and cannot be read to make GST returns containing incorrect particulars sacrosanct.
  • A bona fide, inadvertent error in a GST return, accompanied by no loss of revenue, must be permitted to be rectified notwithstanding the statutory proviso, since a contrary reading would lead to absurdity in a self-reporting, cascading-credit regime.
  • The Court found the petitioner's reliance on Sun Dye Chem, Pentacle Plant Machineries, Shiva Jyoti Construction and Mahalaxmi Infra Contract apposite, noting a common thread across High Courts permitting such correction.
  • The Department was directed to permit rectification of Form GSTR-1 for July 2021, November 2021 and January 2022, either online or manually, within four weeks.

Important Clarification

  • The statutory time-bar on rectifying GSTR-1 under Section 37(3)/39(9) is not absolute where the error is bona fide, inadvertent, and results in no loss of revenue to the Government.
  • Courts across jurisdictions (Madras, Orissa, Jharkhand, and now Bombay) have converged on permitting correction of Bill-to-Ship-to GSTIN mismatches and similar clerical errors despite the technical cut-off date.

Sections Involved

  • Section 37, CGST Act, 2017 — furnishing of details of outward supplies (GSTR-1) and the proviso restricting rectification.
  • Section 38, CGST Act, 2017 — communication of details of inward supplies and input tax credit.
  • Section 39, CGST Act, 2017 — furnishing of returns, including the rectification proviso under sub-section (9).

Decision – In Favour of

Assessee. The petition was allowed and the Department was directed to permit rectification of the GSTR-1 returns within four weeks.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

Court: High Court of Judicature at Bombay
Case No.: Writ Petition No.15368 of 2023
Coram: G. S. Kulkarni, J. and Jitendra Jain, J.
Decision Date: 14.12.2023
Disposal Nature: Allowed

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