SC sets aside Delhi HC order on Bharti Airtel's GST refund

The Supreme Court Thursday set aside a Delhi High Court order which allowed Bharti Airtel's plea for fund of Rs 923 crore in excess GST paid by it from July to September 2017 saying that rectification of errors and omissions is permissible only at the initial stages.

New Delhi:The Supreme Court Thursday set aside a Delhi High Court order which allowed Bharti Airtel's plea for fund of Rs 923 crore in excess GST paid by it from July to September 2017 saying that rectification of errors and omissions is permissible only at the initial stages.

A bench of Justices A M Khanwilkar and Dinesh Maheshwari allowed the appeal filed by the Centre against the high court's May 5, 2020 judgement which permitted Airtel to rectify Form GSTR-3B, GST summary return form for the period.

The apex court said an assessee cannot be permitted to unilaterally carry out 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.

"The law permits rectification of errors and omissions only at the initial stages of Forms GSTR­1 and GSTR­3, but in the specified manner. It is a different dispensation provided than the one in pre-GST period, which did not have the provision of auto-populated records and entries," the bench said.

The apex court said the challenge to the impugned Circular No. 26/26/2017­GST issued by the Commissioner (GST) dated December 29, 2017, is unsustainable. The apex court however rejected the Centre's submission regarding jurisdiction of the Delhi High Court to entertain the writ petition.

"As regards the jurisdiction of the Delhi High Court, the registered office of respondent No. 1 is in Delhi. The appellant (respondent in the writ petition) also has its office in Delhi. The relief claimed in the writ petition amongst others, was to challenge provisions of the central Act and the circulars issued by the competent authority having its office in Delhi. Hence, the jurisdiction of the Delhi High Court cannot be a matter of any doubt," the bench said.

It also trashed the submission of the Centre that state governments/Union Territories are necessary parties to the case before the high court. "Non­ impleadment of respective States/UTs would not come in the way of the writ petitioner to pursue the cause brought before the High Court by way of subject writ petition," the bench said.

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The top court in its 50-page judgement, said that the statement of non operability of Form GSTR­2A, purchase- elated dynamic tax return, is a flimsy plea taken by the Bharti Airtel. "Indeed, if the stated form was operational, the same would have come handy to the writ petitioner for doing self assessment regarding eligibility of ITC and availing thereof.

"But it is a feeble excuse given by the writ petitioner/respondent No. 1 to assail the condition specified in impugned Circular regarding the rectification of the return submitted manually in Form GSTR­3B for the relevant period (July to September 2017)," the bench said. The apex court said that there is no necessity of reading down paragraph 4 of the impugned Circular as has been done by the High Court vide impugned judgment.

"In any case, the direction issued by the High Court being in the nature of issuing writ of mandamus to allow the writ petitioner to rectify Form GSTR 3B for the period ­ July to September 2017, in the teeth of express statutory dispensation, cannot be sustained," the bench said. In May 2020, the high court had allowed Bharti Airtel's plea, directing the government to verify and refund the amount claimed.

"We allow the present petition and permit the Petitioner to rectify Form GSTR­3B for the period to which the error relates, i.e. the relevant period from July, 2017 to September, 2017. "We also direct the Respondents that on filing of the rectified Form GSTR­3B, they shall, within a period of two weeks, verify the claim made therein and give effect to the same once verified," it said.

The high court had taken note of the repeated technical glitches in the electronic common portal introduced by the Department during the transition phase from the erstwhile regime to the GST regime. The high court then noted that Bharti Airtel had submitted its monthly Form GSTR­-3B based on estimates, for the relevant period. The Centre had moved the top court in July last year challenging the high court order.

PTI