UNION OF INDIA versus BHARTI AIRTEL LTD. & ORS. on 28 October 2021

[2021] 10 S.C.R. 825

UNION OF INDIA

v.

BHARTI AIRTEL LTD. & ORS.

(Civil Appeal No. 6520 of 2021)

OCTOBER 28, 2021

[A.M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]

Central Goods and Services Tax Act, 2017 – ss. 16, 39, 49,59 and 168 – Central Goods and Services Tax Rules, 2017 –Circular dated 29.12.2017 issued by the Commissioner (GST) –Validity of – Act of 2017 and Rules of 2017 brought into force alongwith Forms GSTR-1, GSTR-2, GSTR-2A, GSTR-3 and GSTR-3B –Various notifications were issued – In exercise of the powersconferred by Rule 61(5) of the stated Rules, the Central Governmentissued Notification No.21/2017-Central Tax specifying that the returnfor the months of July and August 2017 to be furnished in FormGSTR-3B electronically through the common portal before the datesas specified in the corresponding entry in column (3) of the tablegiven therein – Thereafter again various notifications/circulars wereregarding extension of time (notification dated 17.08.2017), relatingto system-based reconciliation of information furnished in FormsGSTR-1, GSTR-2 and GSTR-3B and the mechanism for correctionof erroneous details furnished in Form GSTR-3B, specifying thetimeline for filing of return in Form GSTR-3B (circular dated01.09.2017) etc. were issued – The Commissioner (GST) then issuedthe circular dated 29.12.2017, on the subject of filing of returnsunder GST, clarifying certain issues considered by the Central Boardof Indirect Taxes and Customs to usher in uniformity inimplementation across field formations – By this Circular, the earlierCircular issued on 01.09.2017 was kept in abeyance – Paragraph4 of the Circular dated 29.12.2017 specifies “...It may be notedthat while making adjustment in the output tax liability or input taxcredit, there can be no negative entries in the FORM GSTR-3B –The amount remaining for adjustment, if any, may be adjusted inthe return(s) in FORM GSTR-3B of subsequent month(s) and, incases where such adjustment is not feasible, refund may beclaimed...” – Respondent No. 1 was, however, keen on availing ofthe dispensation specified in the Circular dated 01.09.2017 for the

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Arelevant period (July to September 2017) – After Form GSTR-2Abecame operational in September 2018, respondent No. 1 realizedthat it had sufficient amount in the ITC ledger account (electroniccredit ledger) during the relevant period – Further, due to non-functionality of GSTR-2A, respondent No. 1 had to discharge itsOTL by depositing/paying in cash – Respondent No.1 urged to rectifyBForm GSTR-3B – However, the impugned Circular dated 29.12.2017came in the way of respondent No. 1 in doing so – Resultantly,respondent No.1 approached the High Court by way of writ petition– High Court allowed the writ petition and read down paragraph 4of circular dated 29.12.2017 to the extent it restricted theCrectification of Form GSTR-3B in respect of period in which theerror had occurred – Before the Supreme Court respondent no. 1contended that the circular dated 29.12.2017 was issued withoutany authority of law – Held: The decision was taken by the Boardafter considering various representations received seekingclarifications on various aspects of return filing such as return filingDdates, applicability of quantum of late fee, amendment of errors insubmitting/filing of Form GSTR-3B and other related queries – Instrict sense, it is not the direction issued by the Commissioner (GST)as such, but it is notifying the decision(s) of the Board taken inexercise of its powers conferred u/s. 168(1) of the 2017 Act – TheEcircular was issued under the signatures of Commissioner (GST),but in essence, it was notifying the decision(s) of the Board, whichhas authority and power to issue directions – The stipulations inthe stated circular including paragraph 4 are consistent with theprovisions of the 2017 Act and the Rules – The express provision inthe form of s. 39(9) clearly posits that omission or incorrectFparticulars furnished in the return in Form GSTR-3B can be correctedin the return to be furnished in the month or quarter during whichsuch omission or incorrect particulars are noticed – Accordingly,the argument that the impugned Circular dated 29.12.2017 wasissued without authority of law is rejected.GCentral Goods and Services Tax Act, 2017 – ss. 16, 39, 49and 59 – Central Goods and Services Tax Rules, 2017 – rr. 59, 60and 61 – Rectification of Form GSTR-3B – The grievance of thewrit petitioner-respondent no.1 before the High Court was that dueto non-operability of Form GSTR-2A at the relevant time (July toHSeptember 2017), it was denied of access to the information about

its electronic credit ledger account and consequently, availing ofInput Tax Credit (ITC) for the relevant period and instead todischarge the Output Tax Liability (OTL) by paying cash to itsvendors – Thus, it has resulted in payment of double tax and unfairadvantage to the tax authorities because of their failure tooperationalize the statutory forms enabling auto-populatingstatement of inward supplies of the recipient and outward suppliesincluding facility of matching and correcting the discrepancieselectronically – The High Court allowed the writ petition for theperiod to which the ‘error relates’ i.e. July to September 2017 –High Court also allowed writ petitioner to rectify Form GSTR-3Bfor the period in which error had occurred – On appeal, held: Thewrit petitioner being a registered person, was under a legalobligation to maintain books of accounts and records as per theprovisions of the 2017 Act and Chapter VII of the 2017 Rulesregarding the transactions in respect of which the OTL would occur– Even in the past (till recently upto the 2017 Act came into force),during the pre-GST regime, the writ petitioner (being registeredperson/assessee) had been maintaining such books of accounts andrecords and submitting returns on its own – No such auto-populatedelectronic data was in vogue – It is the same pattern which had tobe followed by the registered person in the post-GST regime –Further, as per scheme of the 2017 Act, registered person is obligedto do self-assessment of ITC, reckon its eligibility to ITC and ofOTL including the balance amount lying in cash or credit ledgerprimarily on the basis of his office record and books of accountsrequired to be statutorily preserved – That he could do without thecommon electronic portal as was being done in the past till recentlypre-GST regime – The factum of non-operability of Form GSTR-2A,therefore, is a flimsy plea taken by the writ petitioner – The writpetitioner with full knowledge and information had done self-assessment and assessed the OTL for the relevant period and choseto discharge the same by paying cash – Having so opted, now itwas not open to the respondent to resile from option alreadyexercised – As far as rectification of errors is concerned, the matchingand correction process happens on its own as per mechanismspecified in ss.37 and 38, after which Form GSTR-3 is generatedfor the submission of returns; and once submitted any changes mayhave a cascading effect – Therefore, law permits rectification oferror and omissions only at the initial stages of Form GSTR-1 and AB

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AGSTR-3, but in a specified manner – The direction of the High Courtto allow the rectification cannot be sustained – The impugnedjudgment and order of the High Court is set aside.

Allowing the appeal, the Court

HELD: 1. At the outset, the preliminary issue raised byBthe appellant regarding jurisdiction of the Delhi High Court toentertain the writ petition or that the writ petition suffered fromthe vice of non-joinder of the necessary parties including thatthe High Court could not have issued a writ of mandamus, neednot detain us. As regards the jurisdiction of the Delhi High Court,Cthe registered office of respondent No. 1 is in Delhi. The appellant(respondent in the writ petition) also has its office in Delhi. Therelief claimed in the writ petition amongst others, was to challengeprovisions of the central Act and the circulars issued by thecompetent authority having its office in Delhi. Hence, thejurisdiction of the Delhi High Court cannot be a matter of anyDdoubt. Similarly, the argument of the appellant that StateGovernments/Union Territories are necessary parties, does nottake the matter any further. As aforesaid, the writ petitioner wasnot challenging the individual action of the States or the UnionTerritories, but a policy decision of the Central authority whoEhad issued the impugned Circular, namely, the Commissioner(GST). If the writ petitioner succeeded in that challenge, theconsequential relief would follow. In opinion of this Court, non-impleadment of respective States/Union Territories would notcome in the way of the writ petitioner to pursue the cause broughtbefore the High Court by way of subject writ petition. If theFconclusion reached by the High Court regarding the efficacy ofimpugned Circular was to be upheld, no fault can be found withthe directions issued. Accordingly, the preliminary objectionsregarding the maintainability of the writ petition and thejurisdiction of the Delhi High Court deserve to be rejected.G[Para 30][852-H; 853-A-E]

2. Another issue that needs to be decided at the thresholdis whether the impugned Circular dated 29.12.2017 issued bythe Commissioner (GST) is without authority of law. Indisputably,the Circular has been issued to notify the clarification given by H

the Board in exercise of its powers conferred under Section 168(1)of the 2017 Act in order to consolidate the information in variousnotifications and circulars regarding return filing and to ensureuniformity in implementation across field formations. The decisionwas taken by the Board after considering various representationsreceived seeking clarifications on various aspects of return filingsuch as return filing dates, applicability of quantum of late fee,amendment of errors in submitting/filing of Form GSTR-3B andother related queries. In strict sense, it is not the direction issuedby the Commissioner (GST) as such, but it is notifying thedecision(s) of the Board taken in exercise of its powers conferredunder Section 168(1) of the 2017 Act. It is a different matter thata circular is issued under the signatures of Commissioner (GST),but in essence, it is notifying the decision(s) of the Board, whichhas had authority and power to issue directions. Accordingly, theargument that the impugned Circular dated 29.12.2017 has beenissued without authority of law, needs to be rejected.[Para 31][853-E-H; 854-A]

3. Reverting to the analysis of the issues and contentionsdone by the High Court, it is primarily focused on the grievanceof the writ petitioner that due to non-operability of Form GSTR-2A at the relevant time (July to September 2017), it had beendenied of access to the information about its electronic creditledger account and consequently, availing of ITC for the relevantperiod and instead to discharge the OTL by paying cash to itsvendors. Thus, it has resulted in payment of double tax and unfairadvantage to the tax authorities because of their failure tooperationalize the statutory forms enabling auto-populatingstatement of inward supplies of the recipient and outward suppliesincluding facility of matching and correcting the discrepancieselectronically. The High Court, however, did not enquire intothe cardinal question as to whether the writ petitioner wasrequired to be fully or wholly dependent on the auto generatedinformation in the electronic common platform for dischargingits obligation to pay OTL for the relevant period between Julyand September 2017. The answer is - an emphatic No. In that,the writ petitioner being a registered person, was under a legalobligation to maintain books of accounts and records as per the AB

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Aprovisions of the 2017 Act and Chapter VII of the 2017 Rulesregarding the transactions in respect of which the OTL wouldoccur. Even in the past (till recently upto the 2017 Act came intoforce), during the pre-GST regime, the writ petitioner (beingregistered person/assessee) had been maintaining such booksof accounts and records and submitting returns on its own. NoBsuch auto-populated electronic data was in vogue. It is the samepattern which had to be followed by the registered person in thepost-GST regime. [Para 32][854-B-F]

4. As per the scheme of the 2017 Act, it is noticed thatregistered person is obliged to do self-assessment of ITC, reckonCits eligibility to ITC and of OTL including the balance amountlying in cash or credit ledger primarily on the basis of his officerecord and books of accounts required to be statutorily preservedand updated from time to time. That he could do even withoutthe common electronic portal as was being done in the past tillDrecently pre-GST regime. As regards liability to pay OTL, that ison the basis of the transactions effected during the relevant periodgiving rise to taxable event. The supply of goods and servicesbecomes taxable in respect of which the registered person isobliged to maintain agreement, invoices/challans and books ofaccounts, which can be maintained manually/electronically. TheEcommon portal is only a facilitator to feed or retrieve suchinformation and need not be the primary source for doing self-assessment. The primary source is in the form of agreements,invoices/challans, receipts of the goods and services and booksof accounts which are maintained by the assessee manually/

Felectronically. These are not within the control of the taxauthorities. This was the arrangement even in the pre-GSTregime whilst discharging the obligation under the concernedlegislation(s). The position is no different in the post-GST regime,both in the matter of doing self-assessment and regarding dealingwith eligibility to ITC and OTL. Indeed, that self-assessmentGand declarations would be any way subject to verification by thetax authorities. The role of tax authorities would come at thetime of verification of the declarations and returns submitted/filed by the registered person. [Para 33][854-F-H; 855-A-C]

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5. Section 16 of the 2017 Act deals with eligibility of theregistered person to take credit of input tax charged on any supplyof goods or services or both to him which are used or intended tobe used in the course or furtherance of his business. The inputtax credit is additionally recorded in the electronic credit ledgerof such person under the Act. The “electronic credit ledger” isdefined in Section 2(46) and is referred to in Section 49(2) of the2017 Act, which provides for the manner in which ITC may beavailed. Section 41(1) envisages that every registered personshall be entitled to take credit of eligible input tax, asself-assessed, in his return and such amount shall be credited ona provisional basis to his electronic credit ledger. [Para 34][855-D-E]

6. Section 59 does make reference to Section 39, whichdeals with furnishing of returns, but the fact remains that forfurnishing of returns, preparatory work has to be done by theassessee himself and is not fully or wholly dependent on thecommon electronic portal for that purpose. Just couple of weeksbefore the relevant period between July and September 2017,the writ petitioner/respondent No. 1 had been doing that exercisewhich it was expected to continue even under the post-GSTscheme. The factum of non-operability of Form GSTR-2A,therefore, is flimsy plea taken by the writ petitioner/respondentNo. 1. Indeed, if the stated form was operational, the same wouldhave come handy to the writ petitioner for doing self-assessmentregarding eligibility of ITC and availing thereof. But it is a feebleexcuse given by the writ petitioner/respondent No. 1 to assailthe condition specified in impugned Circular dated 29.12.2017regarding the rectification of the return submitted manually inForm GSTR-3B for the relevant period (July to September 2017).[Para 36][856-A-D]

7. The question of reading down paragraph 4 of the saidCircular would have arisen only if the same was to be in conflictwith the express provision in the 2017 Act and the Rules framedthereunder. The express provision in the form of Section 39(9)clearly posits that omission or incorrect particulars furnished inthe return in Form GSTR-3B can be corrected in the return tobe furnished in the month or quarter during which such omissionor incorrect particulars are noticed. This very position has been ABCDE

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Arestated in the impugned Circular. It is, therefore, not contraryto the statutory dispensation specified in Section 39(9) of theAct. The High Court, however, erroneously noted that there isno provision in the Act, which restricts such rectification of thereturn in the period in which the error is noticed. [Para 37][856-D-F]B

8. The entire edifice of the grievance of the writ petitioner(respondent No. 1) was founded on non-operability of Form GSTR-2A during the relevant period, which plea having been rejectedas untenable and flimsy, it must follow that the writ petitioner/respondent No. 1 with full knowledge and information derivedCfrom its books of accounts and records, had done self-assessmentand assessed the OTL for the relevant period and chose todischarge the same by paying cash. Having so opted, it is notopen to the respondent to now resile from the legal option alreadyexercised. It is for that reason, the respondent has advisedly

Dpropounded a theory that in absence of (electronic-auto populatedrecord) 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. This isyet another untenable plea taken by respondent No. 1. For, theappellant having realized that the mechanism specified in SectionsE37 and 38 of the 2017 Act cannot be put in place due to non-operability of the forms governing such mechanism, had to amendthe rules to make a stop-gap arrangement until the entiremechanism became operational. Appellant not only amended thestatutory rule but also provided for filing of return manually inForm GSTR-3B electronically through the common portal withFeffect from July 2017. This is manifest from the circulars/notifications issued from time to time including the timeline forsubmitting the returns. [Para 38][857-C-F]

9. Significantly, the registered person is not denied of theopportunity to rectify omission or incorrect particulars, which heGcould do in the return to be furnished for the month or quarter inwhich such omission or incorrect particulars are noticed. Thus,it is not a case of denial of availment of ITC as such. If at all, it isonly a postponement of availment of ITC. The ITC amountremains intact in the electronic credit ledger, which can be availedHin the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in theelectronic credit ledger, the registered person opts to dischargeOTL by paying cash. That is a matter of option exercised by theregistered 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 entrieseffected in the electronic cash ledger vis-a-vis the electronic creditledger or vice versa. [Para 47][861-E-G]

10. A priori, despite such an express mechanism providedby Section 39(9) read with Rule 61, it was not open to the HighCourt to proceed on the assumption that the only remedy thatcan enable the assessee to enjoy the benefit of the seamlessutilization of the input tax credit is by way of rectification of itsreturn submitted in Form GSTR-3B for the relevant period inwhich the error had occurred. Any unilateral change in such returnas per the present dispensation, would have cascading effect onthe recipients and suppliers associated with the concernedtransactions. There would be complete uncertainty and no finalitycould ever be attached to the self-assessment return filedelectronically. We agree with the submission of the appellant thatany indulgence shown contrary to the statutory mandate wouldnot only be an illegality but in reality, would simply lead to chaoticsituation and collapse of tax administration of Union, States andUnion Territories. Resultantly, assessee cannot be permitted tounilaterally carry out rectification of his returns submittedelectronically in Form GSTR-3B, which inevitably would affectthe obligations and liabilities of other stakeholders, becauseof the cascading effect in their electronic records. [Para 48][861-G-H; 862-A-C]

11. The matching and correction process happens on itsown as per the mechanism specified in Sections 37 and 38, afterwhich Form GSTR-3 is generated for the purposes of submissionof returns; and once it is submitted, any changes thereto mayhave cascading effect. Therefore, the law permits rectification oferrors and omissions only at the initial stages of Forms GSTR-1and GSTR-3, but in the specified manner. It is a differentdispensation provided than the one in pre-GST period, which didnot have the provision of auto-populated records and entries.[Para 49][862-D-E]

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A12. Suffice it to conclude that the challenge to the impugnedCircular No. 26/26/2017-GST dated 29.12.2017, is unsustainablefor the reasons noted hitherto. This Court holds that stipulationsin the stated Circular including in paragraph 4 thereof, areconsistent with the provisions of the 2017 Acts and the Rulesframed thereunder. Having said that, it must follow that there isBno necessity of reading down paragraph 4 of the impugned Circularas has been done by the High Court vide impugned judgment. Inany case, the direction issued by the High Court being in thenature of issuing writ of mandamus to allow the writ petitioner torectify Form GSTR-3B for the period - July to September 2017,Cin the teeth of express statutory dispensation, cannot besustained. [Para 50][862-E-G]

MRF Ltd., Kottayam vs. Asstt. Commissioner(Assessment), Sales Tax & Ors (2006) 8 SCC 702:[2006] 6 Suppl. SCR 417 – referred to.

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AAP & Co., Chartered Accountants through AuthorizedPartner vs. Union of India & Ors. 2019-TIOL-1422-HC-AHM-GST; Panduranga Stone Crushers vs. Unionof India & Ors. 2019-TIOL-1975-HC-AP-GST; SajiS. Proprietor, Adithya and Ambadi Traders & Anr. vs.EThe Commissioner, State GST Department & Anr. dated12.11.2018 in W.P.(C) No. 35868/2018; AdfertTechnologies Pvt. Ltd. vs. Union of India & Ors. 2019-TIOL-2519-HC-P&H-GST; Siddharth Enterprises vs.The Nodal Officer 2019-TIOL-2068-HC-AHM-GST;Krish Authomotors Pvt. Ltd. vs. Union of India & Ors.F2019-TIOL-2153-HC-DEL-GST; Blue Bird Pure Pvt.Ltd. vs. Union of India & Ors. 2019 SCC OnLine Del9250; Lease Plan India Private Limited vs. Governmentof National Capital Territory decided on 13.9.2019 inW.P.(C) No. 3309/2019 – referred to.

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Case Law Reference

[2006] 6 Suppl. SCR 417referred to

Para 44

CIVIL APPELLATE JURISDICTION: Civil Appeal No.6520 of2021.

From the Judgment and Order dated 05.05.2020 of the High Courtof Delhi at New Delhi in Writ Petition (Civil) No. 6345 of 2018.

N. Venkataraman, SG, Mohd. Akhil, Zoheb Hussain, KanuAgarwal, Mukesh Kumar Maroria, Advs. for the Appellant.

Harish N. Salve, Tarun Gulati, Sr. Advs., Ms. Anuradha Dutt,Tushar Jarwal, Rahul Sateeja, Deepak Thackur, Anurag Soan, SparshBhargava, Ms. B. Vijayalakshmi Menon, Advs. for the Respondents.

The Judgment of the Court was delivered by

A. M. KHANWILKAR, J.

1. This appeal emanates from the judgment and order dated05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345 of2018, whereby the High Court allowed the writ petition filed by respondentNo.1 herein and read down paragraph 4 of the Circular No. 26/26/2017-GST dated 29.12.2017[1] issued by the Commissioner (GST), Governmentof India, Ministry of Finance, Department of Revenue, Central Board ofExcise and Customs, GST Policy Wing[2], to the extent it restricted therectification of Form GSTR-3B in respect of the period in which theerror had occurred. The High Court also allowed respondent No.1 torectify Form GSTR-3B for the period in which error had occurred, i.e.,from July to September 2017. Further, the High Court directed theappellant that on filing of the rectified Form GSTR-3B, they shall, withina period of two weeks, verify the claim set forth by respondent No.1and give effect to the same once verified.

2. This lis is aftermath of enacting the Central Goods and ServicesTax Act, 2017[3], which came into force with effect from 01.07.2017.Vide Notification No.10/2017 dated 01.07.2017, Rules 59, 60 and 61 ofthe Central Goods and Services Tax Rules, 2017[4] were brought intoforce along with Forms GSTR-1, GSTR-2, GSTR-2A, GSTR-3 andGSTR-3B.

1 for short, “impugned Circular”

2 for short, “Commissioner (GST)”

3 for short, “2017 Act”

4 for short, “2017 Rules”

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836SUPREME COURT REPORTS

A3. In the context of the matter in issue, it may be apposite to takenote of the Notification No.17/2017-Central Tax dated 27.07.2017 issuedfor amending Rule 61 by altering the wording of Rule 61(5) andintroducing Rule 61(6). Rule 61(5), as it stood earlier when it came intoforce, read thus:

B“(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 hasbeen extended and the circumstances so warrant, return in FORMGSTR-3B, in lieu of FORM GSTR-3, may be furnished in suchmanner and subject to such conditions as may be notified by theCommissioner”C4. This provision was not only substituted, but sub-Rule (6) wasalso inserted in Rule 61 by the said amendment vide Notification No.17/2017-Central Tax. The amended provision reads thus:

“Government of India

DMinistry of Finance

Department of Revenue

Central Board of Excise and Customs

Notification No. 17/2017 – Central Tax

New Delhi, the 27th July, 2017

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G.S.R. ( )E.:- In exercise of the powers conferred by section 164of the Central Goods and Services Tax Act, 2017 (12 of 2017),the Central Government hereby makes the following rules furtherto amend the Central Goods and Services Tax Rules, 2017,namely:- F(1) …..

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2. In the Central Goods and Services Tax Rules, 2017,

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G(v) in rule 61, with effect from 1st July, 2017, for sub-rule (5), thefollowing sub-rules shall be substituted, namely:- “(5) Where the time limit for furnishing of details in FORMGSTR-1 under section 37 and in FORM GSTR-2 under section38 has been extended and the circumstances so warrant, theHCommissioner may, by notification, specify that return shall be furnished in FORM GSTR-3B electronically through thecommon portal, either directly or through a Facilitation Centrenotified by the Commissioner.

(6) Where a return in FORM GSTR-3B has been furnished,after the due date for furnishing of details in FORM GSTR-2—

(a) Part A of the return in FORM GSTR-3 shall be electronicallygenerated on the basis of information furnished through FORMGSTR-1, FORM GSTR-2 and based on other liabilities ofpreceding tax periods and PART B of the said return shall beelectronically generated on the basis of the return in FORMGSTR-3B furnished in respect of the tax period; (b) the registered person shall modify Part B of the return inFORM GSTR-3 based on the discrepancies, if any, betweenthe return in FORM GSTR-3B and the return in FORM GSTR-3 and discharge his tax and other liabilities, if any;

(c) where the amount of input tax credit in FORM GSTR-3exceeds the amount of input tax credit in terms of FORMGSTR-3B, the additional amount shall be credited to theelectronic credit ledger of the registered person.”;

…..”

5. This was followed by Notification No.18/2017-Central Tax dated08.08.2017, whereby time to file Form GSTR-1 for the months of Julyand August 2017 was extended to 05.09.2017 and 20.09.2017respectively. On the same day, in exercise of the powers conferred byRule 61(5) of the stated Rules, the Central Government issued NotificationNo.21/2017-Central Tax specifying that the return for the months ofJuly and August 2017 shall be furnished in Form GSTR-3B electronicallythrough the common portal before the dates as specified in thecorresponding entry in column (3) of the table given therein. To wit, thedate for filing of Form GSTR-3B for the month of July 2017 was notifiedas 20.08.2017 and that for the month of August 2017 was notified as20.09.2017.

6. The Under Secretary to the Government of India issued anotherNotification bearing No.23/2017-Central Tax dated 17.08.2017 to extendthe time for filing Form GSTR-3B for the month of July 2017 for personsopting to file Form GST TRAN-1 on or before 20.08.2017 till 28.08.2017, AB

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Asubject to fulfilment of certain conditions like depositing of tax payableunder the Act and payment of interest, if any. Respondent No.1 filed itsreturn in Form GSTR-3B for the month of July 2017 on 31.08.2017.

7. The Commissioner (GST) issued another Circular No.7/7/2017-GST dated 01.09.2017relating to system-based reconciliation ofBinformation furnished in Forms GSTR-1, GSTR-2 and GSTR-3B andthe mechanism for correction of erroneous details furnished in FormGSTR-3B.

8. On the representations received from the business community,the Under Secretary to the Government of India issued NotificationCNo.35/2017-Central Tax dated 15.09.2017 in exercise of the powersconferred by Section 168 of the 2017 Act read with Rule 61(5) of the2017 Rules and other enabling provisions, on the recommendations ofthe Goods and Services Tax Council[5], specifying the dates for filing ofreturn for the concerned month as per the table given therein, in FormGSTR-3B electronically, through the common portal on or before theDlast date specified in the corresponding entry in column (3) of the saidtable. The last date for the concerned English calendar month wasspecified as 20[th] day of the succeeding English calendar month for theperiod between August and December 2017. Respondent No.1 filed itsreturn in Form GSTR-3B on 20.09.2017 for the month of August 2017Eand on 16.10.2017 for the month of September 2017.

9. The Under Secretary to the Government once again issuedNotification No.56/2017-Central Tax dated 15.11.2017, specifying thetimeline for filing of return in Form GSTR-3B for the month of January,February and March 2018 as 20[th] February, 20[th] March and 20[th] April,2018 respectively.F

10. The Commissioner (GST) then issued the impugned Circularon the subject of filing of returns under GST, clarifying certain issuesconsidered by the Central Board of Indirect Taxes and Customs[6] tousher in uniformity in implementation across field formations. By thisCircular, the earlier Circular issued on 01.09.2017 was kept in abeyanceGuntil the system-based reconciliation prescribed under that Circular wasto be operationalized consequent to issue of relevant notification. Sub-paragraphs 3.1 and 3.2 of paragraph 3 of this Circular dealing withamendment/corrections/rectification of errors, provided as follows; 5 for short, “the Council”

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“3. Amendment / corrections / rectification of errors:

3.1 Various representations have been received wherein registeredpersons have requested for clarification on the procedure forrectification of errors made while filing their FORM GSTR-3B.In this regard, Circular No. 7/7/2017-GST dated 1st September2017 was issued which clarified that errors committed while filingFORM GSTR – 3B may be rectified while filing FORM GSTR-1and FORM GSTR-2 of the same month. Further, in the said circular,it was clarified that the system will automatically reconcile thedata submitted in FORM GSTR-3B with FORM GSTR-1 andFORM GSTR-2, and the variations if any will either be offsetagainst output tax liability or added to the output tax liability of thesubsequent months of the registered person.

3.2 Since, the GST Council has decided that the time period offiling of FORM GSTR-2 and FORM GSTR -3 for the month ofJuly 2017 to March 2018 would be worked out by a Committee ofofficers, the system based reconciliation prescribed under CircularNo. 7/7/2017-GST dated 1st September 2017 can only beoperationalized after the relevant notification is issued. The saidcircular is therefore kept in abeyance till such time.”

11. It may be useful to advert to paragraph 4 of the same Circular,which reads thus:

“4. It is clarified that as return in FORM GSTR-3B do not containprovisions for reporting of differential figures for past month(s),the said figures may be reported on net basis alongwith the valuesfor current month itself in appropriate tables i.e. Table No. 3.1,3.2, 4 and 5, as the case may be. It may be noted that whilemaking adjustment in the output tax liability[7] or input tax credit[8],there can be no negative entries in the FORM GSTR-3B. Theamount remaining for adjustment, if any, may be adjustedin the return(s) in FORM GSTR-3B of subsequent month(s)and, in cases where such adjustment is not feasible, refund may be claimed. Where adjustments have been made in FORM

7 For short, “OTL”

8 For short, “ITC”

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AGSTR-3B of multiple months, corresponding adjustments in FORMGSTR-1 should also preferably be made in the correspondingmonths.”

12. Respondent No. 1 was, however, keen on availing of theBdispensation specified in the Circular dated 01.09.2017 for the relevantperiod (July to September 2017), having realized that there was surplusamount of ITC in its ledger account (electronic credit ledger). It is thecase of respondent No.1 that it had been receiving various servicesfrom suppliers situated throughout India including Delhi. It being a supplierof services as well as recipient of services under the 2017 Act, wasCrequired to file the details of outward and inward supplies for every taxperiod and also of monthly return under the GST Act. In order to calculatethe OTL and the claim of ITC, during the period from July till September2017, there was no formal or official mechanism to check the authenticityof data so as to claim ITC for the relevant period against the transactionsDeffected by it with its suppliers. Whereas, an inbuilt mechanism wasguaranteed by the common electronic portal to be put in place by theCompetent Authority under the 2017 Act. However, during the initialperiod, after introduction of the common electronic portal, it had severaldeficiencies and was not geared up to follow the specified regime ofauto populated data - as predicated in Sections 37 and 38 of the 2017EAct.

13. Form GSTR-1 for the relevant months of July to September2017 was required to be filed before 10.01.2018 vide Notification No.72/2017-Central Tax dated 29.12.2017. Significantly, Form GSTR-2Abecame operational only in September 2018. For that reason, as a stopFgap arrangement, the registered persons were required to submit returnsin Form GSTR-3B. It is only after Form GSTR-2A became operationalin September 2018, it is stated that respondent No. 1 realized that it hadsufficient amount in the ITC ledger account (electronic credit ledger)during the relevant period. Further, due to non-functionality of GSTR-G2A, respondent No. 1 had to discharge its OTL by depositing/paying incash. Had Form GSTR-2A been functional, there would have been noneed for respondent No. 1 to pay the amount in cash, but could haveutilized the ITC account (electronic credit ledger) for payment ofcorresponding OTL. For that reason, respondent No.1 would urge thatif it was allowed to rectify Form GSTR-3B, so as to avail ITCfor theHrelevant period in terms of Circular dated 01.09.2017, the amount paid UNION OF INDIA v. BHARTI AIRTEL LTD. & ORS.[A. M. KHANWILKAR, J.]

by it in cash towards the OTL would get credited to its electronic cashledger account. However, the impugned Circular dated 29.12.2017 comesin the way of respondent No. 1 in doing so. Resultantly, respondent No.1approached the High Court by way of writ petition under Article 226 ofthe Constitution of India, filed on 31.05.2018, praying for the followingreliefs:

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“PRAYER

“In light of the facts and circumstances mentioned above and inconsideration of grounds taken above, the Petitioner most humblyprays that this Hon’ble Court may be pleased to:

(a) issue an appropriate writ, order or direction in nature ofCdeclaration that Rule 61(5), FORM GSTR-3B and CircularNo.26/2017 dated 29.12.2017 are ultra vires the provisionsof the CGST Act to the extent they do not provide for themodification of information in the return of the tax period towhich such information relates and are arbitrary, in violationDof Articles 14, 19(1)(g), 265 and 300A of Constitution ofIndia.

(b) issue an appropriate writ, order or directions declaring theNotifications No.23/2017-Central Tax dated 17.08.2017, 35/2017-Central Tax dated 15.09.2017 and 56/2017-CentralTax dated 15.11.2017, the same as ultra vires the provisionsof Section 39(7) of the CGST Act to the extent it providesfor payment of tax finally under the CGST Act by the datementioned for filing FORM GSTR-3B; E

(c) issue an appropriate writ, order or direction in nature ofcertiorari or any other writ, order or direction of like nature,to call for, examine the records in relation to Circular No.26/2017 dated 29.12.2017 and quash the same to the extent itdoes not provide for the modification of the information inthe return of the tax period to which such information relatesas being arbitrary, in violation of Articles 14, 19(1)(g), 265and 300A of Constitution of India.

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(d) issue an appropriate writ, order or direction declaring thetax liability of the Petitioner filed under FORM GSTR-3Bis provisional and the output tax liability of the Petitionerwill only crystalize after the filing of FORM GSTR-1, 2 and3.

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A(e)issue an appropriate writ, order or directions in the natureof mandamus or any other writ, directing the Respondentsto operationalize/start the facility of FORM GSTR-2 andFORM GSTR-3 for period commencing from 01.07.2017; (f)issue an appropriate writ, order or directions in the natureBof mandamus or any other writ, directing the Respondentsto provide the Petitioner the facility for amendment andmodification of FORM GSTR-3B and grant suchconsequential relief as may be necessary; (g)Pass any orders as this Hon’ble Court may deem fit in theCgiven facts and circumstances of the present case;”

14. During the pendency of the writ petition, Forms GSTR-2,GSTR-2A and GSTR-3 came to be operationalized w.e.f. September2018. The Central Government then issued Notification No.49/2019-Central Tax dated 09.10.2019, thereby omitting Rule 61(6) w.e.f.D01.07.2017 and substituting Rule 61(5) from the same date to read asfollows:

“Government of India

Ministry of Finance

(Department of Revenue)

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Central Board of Indirect Taxes and Customs Notification No. 49/2019 – Central Tax New Delhi, the 9th October, 2019

G.S.R……(E). - In exercise of the powers conferred by sectionF164 of the Central Goods and Services Tax Act, 2017 (12 of 2017),the Central Government hereby makes the following rules furtherto amend the Central Goods and Services Tax Rules, 2017, namely:

(1) …..

(4) In the said rules, in rule 61,-

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(a) for sub-rule (5), the following sub-rule shall be substituted,with effect from the 1[st] July, 2017 namely:- “(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 or in FORM GSTR-2 under section 38 hasHbeen extended, the return specified in sub-section (1) of section 39 shall, in such manner and subject to such conditions as theCommissioner may, by notification, specify, be furnished in FORMGSTR-3B electronically through the common portal, either directlyor through a Facilitation Centre notified by the Commissioner:

Provided that where a return in FORM GSTR-3B isrequired to be furnished by a person referred to in sub-rule (1) then such person shall not be required to furnishthe return in FORM GSTR-3;

…..”

We have adverted to this Notification whilst noting that validitythereof has not been challenged, though it has come into effect from01.07.2017 and governs the period between July and September 2017,which is subject matter of this proceedings.

15. Notably, the High Court did not set aside the impugned Circulardated 29.12.2017, but preferred to read down only paragraph 4 thereofto the extent it restricted the rectification of Form GSTR-3B in respectof period in which the error had occurred. For, the High Court was ofthe view that the stated restriction was contrary to the provisions of the2017 Act and the Rules framed thereunder.

16. The High Court in its judgment took note of the repeatedtechnical glitches in the electronic common portal introduced by theDepartment, during the transition phase from the erstwhile regime to theGST regime. The High Court then noted that respondent No.1 hadsubmitted its monthly Form GSTR-3B based on estimates, for the relevantperiod of July to September 2017. Further, the exact ITC in the electroniccredit ledger for the relevant period could be known to respondent No. 1a month later in October 2018, when GSTR-2A became operational.Only thereafter, respondent No. 1 realized that there had been an excesspayment of Rs.923 crores in cash for discharging OTL. In other words,despite the fact that a bona fide error had occurred for reasons beyondthe control of respondent No. 1, yet respondent No. 1 was unable tocorrect the mistake in Form GSTR-3B for the relevant period. The HighCourt held that CGST contemplated a self-policing system. Resultantly,the statutory provisions had provided for generation of auto-populateddata of the stakeholders. That was a right and not a mere facility madeavailable to registered persons. Thus, every registered person had a A

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Aright to correct the returns in the very month to which they relate andnot visited with any adverse consequences for uploading incorrect data.The High Court noted the admission of the Department that the operationof Forms GSTR-2 and GSTR-3 could not be effected due to technicalissues at their end necessitating postponement for indefinite period. Inother words, the Department itself was not fully geared up to handleBsuch an elaborate electronic procedure. The High Court further notedas to how due to non-functioning of Forms GSTR-2 and GSTR-3, Rule61(5) and 61(6) was required to be inserted in the 2017 Rules and providefor monthly return in Form GSTR-3B, which was a summary return.The High Court also accepted the contention of respondent No. 1 that itChad to discharge the OTL for the relevant period in cash, even though ithad ITC available to its credit in electronic credit ledger, due to the faultof the Department in not operationalizing the statutorily prescribed FormsGSTR-2, GSTR-2A and GSTR-3. That had resulted in excess paymentof cash by respondent No.1. The High Court also took note of the refundprovisions to observe that even if there was a possibility to adjust theDaccumulated ITC in future, it could not be a ground to deprive respondentNo.1 of its option to fully utilize the ITC which it was statutorily entitledto. The High Court held that there was no reason to restrict the mechanismof rectification to the returns of subsequent months. It also held thatparagraph 4 of the impugned Circular dated 29.12.2017 was not inEconsonance with the provisions of the 2017 Act.

17. Accordingly, the High Court allowed the writ petition andpermitted respondent No.1 to rectify Form GSTR-3B for the period towhich the ‘error relates’ i.e., the months of July to September 2017. Theoperative directions issued by the High Court read thus:F“24. Thus, in light of the above discussion, the rectification of thereturn for that very month to which it relates is imperative and,accordingly, we read down para 4 of the impugned Circular No.26/26/2017-GST dated 29.12.2017 to the extent that it restrictsthe rectification of Form GSTR-3B in respect of the period inwhich the error has occurred. Accordingly, we allow the presentGpetition and permit the Petitioner to rectify Form GSTR-3B forthe period to which the error relates, i.e. the relevant period fromJuly, 2017 to September, 2017. We also direct the Respondentsthat on filing of the rectified Form GSTR-3B, they shall, within aperiod of two weeks, verify the claim made therein and give effectHto the same once verified. In view of the fact that the final relief sought by the Petitioner has been granted and the petition is allowed,no separate order is required to be passed in the application seekinginterim relief. Accordingly, the said application is disposed of assuch.”

18. The appellant has assailed the view so taken by the HighCourt. At the outset, it was urged that the High Court had no territorialjurisdiction to entertain the writ petition filed by respondent No.1. Thisobjection is founded on the argument that the source of power to levyand collect GST under the 2017 Act vests both in the State and theCentre. The Delhi High Court could not have decided the issuesconcerning other State(s) and that too without making them as partyrespondent. The writ petitioner has chosen to only implead the Councilwhich is a body created only to decide about the policy and is not a taxcollector as such. Thus, besides the High Court had no territorialjurisdiction, the writ petition suffered from the vice of non-joinder ofnecessary parties.

19. As regards the merits, the appellant has invited our attentionto the constitutional background and the erstwhile regimes of the centralexcise law, service tax law etc., and in contrast, the dispensation providedin the GST regime and the obligation of every outward supplier to payOTL. It is urged that the GST is a beginning of a new era of cooperativefederalism and the purport of Article 246A read with Article 279A of theConstitution fortify that position. It is a regime to bring about paradigmshift in the erstwhile taxes such as excise duty, service tax, entry tax,VAT and other additional and minor levies based on multiple taxableevents, which have been subsumed into one taxable event called “supplyof goods and services”. The new dispensation enables both the Union ofIndia and the respective States to become joint federal partner in taxinggoods and services simultaneously and have equal rates on the occurrenceof the taxable event. Notably, the 2017 Act is not ascribable to any Entryin List I, List II or for that matter, List III. It is a sui generis regime inthe Constitution by virtue of Article 246A read with Article 279A and thefield of taxation thereunder is goods and services and the power to tax issimultaneous and coextensive.

20. Shri N. Venkataraman, learned Additional Solicitor General ofIndia, took us through the provisions of the 2017 Act regarding paymentof duties/taxes and availing of ITC including the eligibility and utilizationof ITC. As regards the eligibility and utilization of ITC, there is a statutory A

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Aduty fastened on every registered person governed under various regimesand presently under the GST law, to pay OTL and a corresponding rightto avail and utilize ITC, subject to eligibility and conditions specifiedtherefor. The right to claim ITC, being a statutory right, is circumscribedby conditions and restrictions, subject to which a registered person isentitled to take credit. The provisions regarding entitlement of ITC enableBa registered person to utilize the same for discharging the OTL. It isimperative upon a registered person to maintain records regardingtransactions between suppliers and the recipients based on theiragreements, invoices and books of accounts, either manually orelectronically. The records so maintained by the registered person wouldCitself reveal about the eligibility to credit; and its availment is within theexclusive domain of the supplier and the recipient concerned. Theregistered person under the law is obliged to do a self-assessment of itstransactions and determine the OTL and exercise the option to avail ofand utilize the ITC to the extent required or to pay the OTL by cash. TheAuthorities have no role to play whatsoever in that regard. It is an optionDto be exercised by the registered person and not by the Authorities. Thisprinciple has remained the same both before the GST and also post GSTregime. Indeed, the registered person has been provided with a commonelectronic portal or tax electronic portal, which is only an enabler and afacilitator in bringing on board all the registered persons which includeEthe supplier, recipient, registered person and other recipients. The efficacyof common electronic portal or so to say malfunctioning thereof, doesnot extricate the registered person from the primary obligation of self-assessment of OTL as predicated in Section 16 of the 2017 Act. Fordoing so, the registered person is obliged to maintain accounts and recordsas envisaged under Chapter VII of the 2017 Rules. That ought to be theFbasis for self-assessment of OTL in the first place. On the basis of thefacts and figures emanating from such records, the registered personcan collate the relevant information regarding entitlement to avail ITCcollected from supplier of goods or services or for both which are usedor intended to be used in the course of furtherance of his business.GSuffice it to observe that the registered person is expected to exercisethe option of utilizing ITC or to pay by cash for discharging his OTL atthe time of filing of return on the information gathered from the primaryrecord in his possession.

21. The eligibility and availment of ITC is indeed subject toHconditions and restrictions in the manner specified in Section 49 of the 2017 Act. If the registered person intends to avail ITC, he can do so bypaying the OTL from his electronic credit ledger referred to in Sections2(46) and 49(2) of the 2017 Act. He can avail of ITC on the conditionsspecified in Section 16(2) read with Sections 41 and 49(2) of the 2017Act. As per Section 59 of the 2017 Act, every registered person is requiredto self-assess the taxes payable under the 2017 Act and furnish a returnfor each tax period as specified under Section 39 of the 2017 Act.

22. It is urged that the scheme of the 2017Act makes it amplyclear that the obligation in the matter of deciding about the eligibility andmode of payment of OTL including self-assessment, is to be exercisedby the registered person himself and the Authorities have no role to playat that stage. The registered person cannot find fault with the deficienciesin the common electronic portal so as to extricate from this obligation.Similar obligation was required to be discharged by him even before theGST regime came into being vide the 2017 Act with effect from01.07.2017. The functions or features provided in the common electronicportal of auto matching and auto populating of the record of the supplierand the recipient and vice versa are only a facility made available to theregistered person. The features provided in the context of Sections 42and 43 of the 2017 Act relating to ITC and OTL, are dynamic andseamless processes of matching of invoices of the supplier and therecipient. The invoice matching mechanism contemplated under Sections42 and 43, was expected to be accomplished by the introduction of a setof forms, namely, GSTR-1, GSTR-1A, GSTR-2, GSTR-2A and GSTR-3. As per the mechanism predicated in the 2017 Act, the entire exchangeprocesses were intended to happen between 11[th] and 17[th] of everyfollowing month and once the reconciliation gets over, every registeredperson had to file a monthly return in Form GSTR-3 by 20[th] of the followingmonth and discharge his OTL. As aforesaid, to overcome the initialproblems faced after introduction of the common electronic portal andthe non-operability of the concerned forms, it was decided to make astop gap arrangement enabling the registered person to file his returnelectronically in Form GSTR-3B, which contains necessary informationrelevant for completing the self-assessment process and payment ofOTL, if any. Though a stop gap arrangement, it was always treated asreturn within the meaning of Section 39 of the 2017 Act. Any rectificationregarding omission or incorrect particulars referred to therein, could befurnished in the month or quarter during which such omission or incorrectparticulars came to be noticed. Taking any other view would result in AB

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Aushering in inconsistency and uncertainty not only to the concernedregistered person, but also to his recipient and supplier and other recordsnot directly connected with the registered person. Hence, allowingcorrection/rectification of Form GSTR-3B of the concerned period isnot permissible in the new dispensation; and for which reason, an expressprovision had been made in Section 39(9)[9] that rectification regardingBomission or incorrect particulars in the return so filed can be effectedfor the month or quarter during which such omission or incorrectparticulars are noticed and not in the concerned return. The correctionspermitted in Forms GSTR-1 and GSTR-2 are of different nature, whereasthe return filed in Form GSTR-3B for the relevant period ought to remainCas it is.

23. It is further urged that Sections 37 and 38 of the 2017 Act donot provide for right relating to eligibility of ITC. The obligation to doself-assessment of ITC and of OTL and to pay the self-assessed OTLby using the ITC or by cash payment, is a matter of exercising option forDelecting the mode of discharge of OTL. Further, reconciliation predicatedunder Sections 37 and 38 between the outward supplier, registered personand the subsequent recipient, does not impact the rights and obligationsof the registered person regarding self-assessment of OTL and the dutyto pay the self-assessed OTL in the manner he wants to discharge byusing self-assessed ITC or cash payment.E

24. It is urged that the option so exercised by the registered personis his own volition and the Authorities have no concern or any role toplay at that stage. The High Court has completely glossed over thiscrucial aspect and proceeded to answer the matter in issue being swayed F9 39. Furnishing of returns.-(1) to (8) …..

(9) Subject to the provisions of sections 37 and 38, if any registered person afterfurnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein,other than as a result of scrutiny, audit, inspection or enforcement activity by the taxauthorities, he shall rectify such omission or incorrect particulars in the returnGto be furnished for the month or quarter during which such omission or incorrectparticulars are noticed, subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall beallowed after the due date for furnishing of return for the month of September or secondquarter following the end of the financial year, or the actual date of furnishing ofrelevant annual return, whichever is earlier.

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by the fact that common electronic portal had faced rough weather duringthe initial phase and that the statutory forms were not operationalized.The High Court was impressed by the argument of the writ petitionerthat due to non-operability of the stated forms, the writ petitioner wasdenied of access to the relevant information, in particular about the ITCamount in its electronic credit ledger. This plea could not have beentaken by the writ petitioner considering the obligation of self-assessmentof ITC and of OTL and duty to pay self-assessed OTL. The eligibility ofITC and the right to exercise option to pay the OTL through the mode ofhis choice would come later. For doing the self-assessment, the registeredperson is fully equipped with accounts and records maintained by him asper the statutory requirement, which are in his complete control andknowledge. In other words, the High Court committed manifest error inopining that the stipulation specified in the impugned Circular, is contraryto the provisions of the 2017 Act; whereas, express provisions of the2017 Act provide to the contrary. Further, the High Court erroneouslyassumed that the writ petitioner had submitted the monthly Form GSTR-3B for the period of July to September 2017, based on its estimate. Thewrit petitioner cannot be permitted to take such a plea despite the statutoryrequirement of maintaining accounts and records as provided by the2017 Act and the Rules framed thereunder. Furthermore, effectingcorrection/rectification in the returns for the month or quarter duringwhich such omission or incorrect particulars have been noticed, doesnot in any way result in denying the right to avail ITC. The fact thatrespondent No.1 would not be eligible to get refund of cash also, cannotbe the basis to permit the registered person to swap the entry in theelectronic cash ledger with the entry in the electronic credit ledger orvice versa. No such mechanism has been provided in the 2017 Act orthe Rules framed thereunder. If permitted, even as one of the casesbecause of non-operability of the forms at the relevant time, may resultin chaotic situation and collapse of the tax administration of the Union,States and the Union Territories.

25. Per contra, learned counsel for respondent No. 1 has supportedthe reasons as had weighed with the High Court in upholding the challengeand reading down paragraph 4 of the impugned Circular dated 29.12.2017to the extent it restricts the rectification of Form GSTR-3B in respect ofthe period in which the error had occurred. It is emphasized that FormGSTR-3B is only a stop gap arrangement to overcome the technicalglitches in the common electronic portal and non-operability of the ABC

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Aconcerned statutory forms enabling auto-populating of relevant entriesand records. The fact that circumstances prevalent at the initial stagesof introduction of common electronic platform has been acknowledgedby the authorities and introduction of Form GSTR-3B is a testimony ofthat admission. Having done so, it was not open to the authorities todeny the taxpayers their dues, in particular, right to revise their returnsBand avail of ITC. The provision made in the impugned Circular dated29.12.2017, not permitting rectification of the return is conceptually flawedand not consistent with the legislative intent and the provisions of the2017 Act and the Rules framed thereunder. It denies the taxpayer hisstatutory right to utilize credits, due to technical problems in not puttingCthe electronic platform in place. The respondent realized that hugeamounts of excess ITC is available in its books only after Form GSTR-2A was made operational in September, 2018. By not permitting therespondent to avail of ITC shown in the electronic credit ledger hadresulted in collection of double tax from the respondent and an unfairadvantage to the Government. Permitting the registered person to availDof the excess ITC in its electronic credit ledger, cannot be considered tobe unfair advantage taken by the taxpayer.

26. The 2017 Act provided that in a Business to Business (B 2 B)transaction, a supplier (of goods/services) and a recipient (of goods/services) would interact with each other through a common electronicEportal which as per the statutory framework was required to provisionfor payment of tax and furnishing of returns including availing/takingand utilization of credit. Sections 37, 38 read with Section 42 of the 2017Act and Rules 59 and 60 of the 2017 Rules are indicative of the featuresthat were required to be provided in the common portal. It is supposed to Fprovide for auto-populating of the records of supplier and the recipientincluding the facility of interaction of GSTN through Forms GSTR-1,1A, 2, 2A and 3 and generation and filing of periodical returns. Itcontemplated an automatic matching, reversal and reclaim of ITC. Themechanism for rectification has been envisaged in Section 39(9) of the 2017 Act, which is subject to the steps to be taken under Sections 37 andG38 regarding matching and verification. The return to be filed in FormGSTR-3B had no such features and was only a stop-gap arrangement,as the mechanism provided in Sections 37 and 38 was not put in place.The provision regarding rectification under Section 39(9), therefore, hadno application to the stop-gap arrangement of filing return in Form GSTR-H3B, much less for the relevant period (July to September 2017). Hence, reliance placed on Section 39(9) of the 2017 Act to justify the stipulationsspecified in the impugned Circular dated 29.12.2017, cannot becountenanced.

27. It is urged that Form GSTR-3B is a summary return and doesnot contain the invoice-wise details. The recipient who had no access tothe vendor’s returns had no facility to verify the correctness of the ITCtaken. Form GSTR-3B is a consolidated return wherein the assesseemanually files its total credit, OTL etc. The appellant cannot takeadvantage of its own failure of not being able to operationalize FormsGSTR-2 and GSTR-3 right at the inception when the provisions of theAct came into force. It is unfair and inequitable that failure of thedepartment should benefit the department by forcing the registered personto discharge OTL. On the other hand, the assessees were given tounderstand right from 2015 that the system of return filing will beautomated under GST. The entire industry and trade accordinglycontemplated system changes based on these declarations i.e., returnfiling and taking/utilizing credit will be on the basis of auto-populatedreturns. Notably, three days before the implementation of GST, eventhough Sections 37, 38, 39, 42 and 43 were notified and were broughtinto force, the appellant issued Notification No. 10/2017 - Central Taxdated 28.06.2017 stating that the automated system will not beimplemented and a summary manual return under Section 61(5) in FormGSTR-3B, which is “in lieu of” Form GSTR-3 has to be filed. Theparameters specified in Form GSTR-3 were substituted in Form GSTR-3B. This arrangement was soon altered by issuing Notification No. 17/2017-Central Tax dated 27.07.2017, thereby amending Rule 61(5)retrospectively with effect from 01.07.2017, omitting the words “in lieuof” and expressly mentioning that Form GSTR-3B was introduced onlytill the period Sections 37 and 38 were not in operation. Further, FormGSTR-3B was only a stop-gap arrangement and while filing of FormGSTR-2 is operationalized, Form GSTR-3 of the preceding tax periodswill be automatically generated and filled after acceptance/rejectioncontemplated under Sections 37 and 38 of the 2017 Act. In October2019, by amending Rule 61(5) retrospectively making the return filed inForm GSTR-3B final return, the automated system contemplated underSections 37 to 39 was formally done away with in the teeth of statutorymandate.

28. According to respondent No. 1, it is only after operationalizationof GSTR-2A in September, 2018 that complete data for July to September AB

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A2017 became available to it and on the basis of which it wanted to revisethe return filed for that period. It was possible to do so in terms ofCircular No. 7/7/2017 dated 01.09.2017, which predicated that the detailsfurnished in Form GSTR-3B will be corrected based on Forms GSTR-1and GSTR-2 and will be auto-populated and will reflect in Form GSTR-3 in that particular month. However, that was done away with byBintroducing impugned Circular No. 26/26/2017-GST dated 29.12.2017.The arrangement specified in the impugned Circular was against thespirit of the Act and the Rules framed thereunder. Hence, the HighCourt justly recorded that finding. It is urged that rectification/adjustmentmechanism for the month when the errors are noticed is contrary to theCscheme of the 2017 Act and would defeat the statutory right of theassessee by putting a fetter to not avail the ITC, though available in hisaccount of electronic credit ledger. The High Court rightly read downparagraph 4 of the impugned Circular dated 29.12.2017 and also issueddirection to allow the respondent to rectify Form GSTR-3B for the periodto which error relates i.e., July to September 2017, subject to verificationDby the authorities concerned. This was obviously an equitable arrangementand not opposed to any provision of the Act or the Rules. This directionwould enable the respondent to avail of the ITC from the surplus shownin his account of electronic credit ledger and the excess amount paid incash would correspondingly be reinstated in electronic cash ledger ofEthe respondent, which is to the tune of Rs.923 crores. As a matter offact, the impugned Circular dated 29.12.2017 is wholly without jurisdictionas it arbitrarily alters the statutory framework. It is also inconsistentwith the return filing system under previous tax regime, such as ServiceTax Rules, Central Excise Tax Rules, Delhi Value Added Tax Act, IncomeTax Act etc. In all these legislations, it would have been open to theFassessee to rectify the original self-assessed return at a later point oftime. It is urged that the High Court was competent to issue writ ofmandamus as it has been done in the present case.

29. We have heard Mr. N. Venkataraman, learned AdditionalSolicitor General of India for the appellant and Mr. Harish N. Salve andGMr. Tarun Gulati, learned senior counsel appearing for respondent No.1.

30. At the outset, the preliminary issue raised by the appellantregarding jurisdiction of the Delhi High Court to entertain the writ petitionor that the writ petition suffered from the vice of non-joinder of theHnecessary parties including that the High Court could not have issued a

writ of mandamus, need not detain us. As regards the jurisdiction of theDelhi 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 challengeprovisions of the central Act and the circulars issued by the competentauthority having its office in Delhi. Hence, the jurisdiction of the DelhiHigh Court cannot be a matter of any doubt. Similarly, the argument ofthe appellant that State Governments/Union Territories are necessaryparties, does not take the matter any further. As aforesaid, the writpetitioner was not challenging the individual action of the States or theUnion Territories, but a policy decision of the Central authority who hadissued the impugned Circular, namely, the Commissioner (GST). If thewrit petitioner succeeded in that challenge, the consequential relief wouldfollow. In our opinion, non-impleadment of respective States/UnionTerritories would not come in the way of the writ petitioner to pursue thecause brought before the High Court by way of subject writ petition.Even the argument regarding High Court having exceeded jurisdiction inissuing writ of mandamus, does not commend to us. If the conclusionreached by the High Court regarding the efficacy of impugned Circularwas to be upheld, no fault can be found with the directions issued by it inparagraph 24 of the impugned judgment, reproduced above. Accordingly,the preliminary objections regarding the maintainability of the writ petitionand the jurisdiction of the Delhi High Court deserve to be rejected.

31. Another issue that needs to be decided at the threshold iswhether the impugned Circular dated 29.12.2017 issued by theCommissioner (GST) is without authority of law. Indisputably, the Circularhas been issued to notify the clarification given by the Board in exerciseof its powers conferred under Section 168(1) of the 2017 Act in order toconsolidate the information in various notifications and circulars regardingreturn filing and to ensure uniformity in implementation across fieldformations. The decision was taken by the Board after considering variousrepresentations received seeking clarifications on various aspects ofreturn filing such as return filing dates, applicability of quantum of latefee, amendment of errors in submitting/filing of Form GSTR-3B andother related queries. In strict sense, it is not the direction issued by theCommissioner (GST) as such, but it is notifying the decision(s) of theBoard taken in exercise of its powers conferred under Section 168(1) ofthe 2017 Act. It is a different matter that a circular is issued under thesignatures of Commissioner (GST), but in essence, it is notifying the AB

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Adecision(s) of the Board, which has had authority and power to issuedirections. Accordingly, the argument that the impugned Circular dated29.12.2017 has been issued without authority of law, needs to be rejected.

32. Reverting to the analysis of the issues and contentions doneby the High Court, it is primarily focused on the grievance of the writBpetitioner that due to non-operability of Form GSTR-2A at the relevanttime (July to September 2017), it had been denied of access to theinformation about its electronic credit ledger account and consequently,availing of ITC for the relevant period and instead to discharge the OTLby paying cash to its vendors. Thus, it has resulted in payment of doubletax and unfair advantage to the tax authorities because of their failure toCoperationalize the statutory forms enabling auto-populating statement ofinward supplies of the recipient and outward supplies including facilityof matching and correcting the discrepancies electronically. The HighCourt, however, did not enquire into the cardinal question as to whetherthe writ petitioner was required to be fully or wholly dependent on theDauto generated information in the electronic common platform fordischarging its obligation to pay OTL for the relevant period betweenJuly and September 2017. The answer is - an emphatic No. In that, thewrit petitioner being a registered person, was under a legal obligation tomaintain books of accounts and records as per the provisions of the2017 Act and Chapter VII of the 2017 Rules regarding the transactionsEin respect of which the OTL would occur. Even in the past (till recentlyupto the 2017 Act came into force), during the pre-GST regime, the writpetitioner (being registered person/assessee) had been maintaining suchbooks of accounts and records and submitting returns on its own. Nosuch auto-populated electronic data was in vogue. It is the same patternFwhich had to be followed by the registered person in the post-GSTregime.

33. As per the scheme of the 2017 Act, it is noticed that registeredperson is obliged to do self-assessment of ITC, reckon its eligibility toITC and of OTL including the balance amount lying in cash or creditGledger primarily on the basis of his office record and books of accountsrequired to be statutorily preserved and updated from time to time. Thathe could do even without the common electronic portal as was beingdone in the past till recently pre-GST regime. As regards liability to payOTL, that is on the basis of the transactions effected during the relevantperiod giving rise to taxable event. The supply of goods and servicesHbecomes taxable in respect of which the registered person is obliged to maintain agreement, invoices/challans and books of accounts, which canbe maintained manually/electronically. The common portal is only afacilitator to feed or retrieve such information and need not be the primarysource for doing self-assessment. The primary source is in the form ofagreements, invoices/challans, receipts of the goods and services andbooks 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 dischargingthe obligation under the concerned legislation(s). The position is nodifferent 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 toverification by the tax authorities. The role of tax authorities would comeat the time of verification of the declarations and returns submitted/filedby the registered person.

34. Section 16 of the 2017 Act deals with eligibility of the registeredperson to take credit of input tax charged on any supply of goods orservices or both to him which are used or intended to be used in thecourse or furtherance of his business. The input tax credit is additionallyrecorded in the electronic credit ledger of such person under the Act.The “electronic credit ledger” is defined in Section 2(46) and is referredto in Section 49(2) of the 2017 Act, which provides for the manner inwhich ITC may be availed. Section 41(1) envisages that every registeredperson shall be entitled to take credit of eligible input tax, as self-assessed,in his return and such amount shall be credited on a provisional basis tohis electronic credit ledger.

35. As aforesaid, every assessee is under obligation to self-assessthe eligible ITC under Section 16(1) and 16(2) and “credit the same inthe electronic credit ledger” defined in Section 2(46) read with Section49(2) of the 2017 Act. Only thereafter, Section 59 steps in, whereunderthe registered person is obliged to self-assess the taxes payable underthe Act and furnish a return for each tax period as specified under Section39 of the Act. To put it differently, for submitting return under Section59, it is the registered person who has to undertake necessary measuresincluding of maintaining books of accounts for the relevant period eithermanually or electronically. On the basis of such primary material, self-assessment can be and ought to be done by the assessee about theeligibility and availing of ITC and of OTL, which is reflected in theperiodical return to be filed under Section 59 of the Act.

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A36. Section 59 does make reference to Section 39, which dealswith furnishing of returns, but the fact remains that for furnishing ofreturns, preparatory work has to be done by the assessee himself and isnot fully or wholly dependent on the common electronic portal for thatpurpose. Just couple of weeks before the relevant period between Julyand September 2017, the writ petitioner/respondent No. 1 had been doingBthat exercise which it was expected to continue even under the post-GST scheme. The factum of non-operability of Form GSTR-2A,therefore, is flimsy plea taken by the writ petitioner/respondent No. 1.Indeed, if the stated form was operational, the same would have comehandy to the writ petitioner for doing self-assessment regarding eligibilityCof ITC and availing thereof. But it is a feeble excuse given by the writpetitioner/respondent No. 1 to assail the condition specified in impugnedCircular dated 29.12.2017 regarding the rectification of the returnsubmitted manually in Form GSTR-3B for the relevant period (July toSeptember 2017).

D37. The question of reading down paragraph 4 of the said Circularwould have arisen only if the same was to be in conflict with the expressprovision in the 2017 Act and the Rules framed thereunder. The expressprovision in the form of Section 39(9) clearly posits that omission orincorrect particulars furnished in the return in Form GSTR-3B can becorrected in the return to be furnished in the month or quarter duringEwhich such omission or incorrect particulars are noticed. This veryposition has been restated in the impugned Circular. It is, therefore, notcontrary to the statutory dispensation specified in Section 39(9) of theAct. The High Court, however, erroneously noted that there is no provisionin the Act, which restricts such rectification of the return in the period inFwhich the error is noticed. It is then noted by the High Court that asthere is no possibility of getting refund of surplus or excess ITC shownin the electronic credit ledger, therefore, the only remedy that can enablethe writ petitioner to enjoy the benefit of the seamless utilization of theITC is by way of rectification in its annual tax return (Form GSTR-3B)

for the relevant period. Further, the High Court in paragraph 23 of theGimpugned judgment, noted that the relief sought in the case before it,was indispensable. This logic does not commend to us. For, if there is noprovision regarding refund of surplus or excess ITC in the electroniccredit ledger, it does not follow that the assessee concerned who hasdischarged OTL by paying cash (which he is free to pay in cash in spiteHof the surplus or excess electronic credit ledger account), can later on ask for swapping of the entries, so as to show the corresponding OTLamount in the electronic cash ledger from where he can take refund.Payment for discharge of OTL by cash or by way of availing of ITC, isa matter of option, which having been exercised by the assessee, cannotbe reversed unless the Act and the Rules permit such reversal orswapping of the entries. As a matter of fact, Section 39(9) provides foran express mechanism to correct the error in returns for the month orquarter during which such omission or incorrect particulars have beennoticed.

38. The entire edifice of the grievance of the writ petitioner(respondent No. 1) was founded on non-operability of Form GSTR-2Aduring the relevant period, which plea having been rejected as untenableand flimsy, it must follow that the writ petitioner/respondent No. 1 withfull knowledge and information derived from its books of accounts andrecords, had done self-assessment and assessed the OTL for the relevantperiod 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 alreadyexercised. It is for that reason, the respondent has advisedly propoundeda theory that in absence of (electronic-auto populated record) mechanismmade available as per Sections 37 and 38, return filed in Form GSTR-3Bis not ascribable to Section 39(9) of the 2017 Act read with Rule 61(5)of the 2017 Rules. This is yet another untenable plea taken by respondentNo. 1. For, the appellant having realized that the mechanism specified inSections 37 and 38 of the 2017 Act cannot be put in place due to non-operability of the forms governing such mechanism, had to amend therules to make a stop-gap arrangement until the entire mechanism becameoperational. Appellant not only amended the statutory rule but alsoprovided for filing of return manually in Form GSTR-3B electronicallythrough the common portal with effect from July 2017. This is manifestfrom the circulars/notifications issued from time to time including thetimeline for submitting the returns.

39. It is futile to urge that Section 39(9) has no application to thefact situation of the present case. In that, allowing filing of return inForm-GSTR-3B albeit a stop gap arrangement, is ascribable to Section39 of the 2017 Act read with Rule 61 of the 2017 Rules. Indeed, it is notcomparable to the mechanism specified for electronically generated FormGSTR-3 referable to Rule 61. Nevertheless, Form GSTR-3B is prescribedas a “return” to be furnished by the registered person and by thesubsequent amendment of Rule 61(5) brought into force with effect AB

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Afrom 01.01.2017, it has been clarified that such person need not furnishreturn in Form GSTR-3 later on. Notably, the validity of that amendmentincluding that of Notification dated 09.10.2019 bearing No. 49/2019, isnot put in issue before us.

40. No doubt, in the initial stages, it was notified that Form GSTR-B3B will be in lieu of Form GSTR-3 but that was soon corrected by deletionof that expression. At the same time, as the mechanism for furnishingreturn in terms of Sections 37 and 38 was not operationalized during therelevant period (July to September 2017) and became operational onlylater, the efficacy of Form GSTR-3B being a stop gap arrangement forfurnishing of return, as was required under Section 39 read with RuleC61, would not stand whittled down in any manner. It would still beconsidered as a return for all purposes though filled manuallyelectronically.

41. The Gujarat High Court in the case of AAP & Co., CharteredAccountants through Authorized Partner vs. Union of India & Ors.[10],Dwas called upon to consider the question whether the return in FormGSTR-3B is the return required to be filed under Section 39 of the 2017Act. Although, at the outset it noted that the concerned writ petition hadbeen rendered infructuous but, went on to answer the question raisedtherein. It took the view that Form GSTR-3B was only a temporaryEstop-gap arrangement till due date of filing of return Form GSTR-3 isnotified. We do not subscribe to that view. Our view stands reinforcedby the subsequent amendment to Rule 61(5), restating and clarifying theposition that where return in Form GSTR-3B has been furnished by theregistered person, he shall not be required to furnish the return in FormGSTR-3. This amendment was notified and came into effect fromF01.07.2017[11] retrospectively. The validity of this amendment has not beenput in issue.

42. The Delhi High Court in the impugned judgment, has takennote of decision of the Andhra Pradesh High Court in case ofPanduranga Stone Crushers vs. Union of India & Ors.[12] This decisionGdealt with the period between July 2017 and March 2018 for the financialyear 2017-2018. The petitioner therein had submitted Form GSTR-3Breturn through GST portal, as required. While doing so, he had 10 2019-TIOL-1422-HC-AHM-GST

11 Vide Notification/GSR No. 772(E) dated 9th October, 2019H12 2019-TIOL-1975-HC-AP-GST

inadvertently and by mistake reported IGST input tax credit in a columnrelating to import of goods and services instead of placing that particularamount, namely, IGST input tax credit in all other ITC column. The writpetitioner asserted that he was entitled to rectify such mistake whichhad crept in Form GSTR-3B returns. The Union of India had contendedthat said situation was covered by Section 39(9) of the 2017 Act and thepetitioner could rectify the omission, but did not avail the chance to rectifyor modify the returns. Therefore, he was not entitled to relief as claimedin the writ petition. The Andhra Pradesh High Court relied on the decisionof the Gujarat High Court in AAP & Co.[13 ]and the decision of the KeralaHigh Court in Saji S. Proprietor, Adithya and Ambadi Traders &Anr. vs. The Commissioner, State GST Department & Anr.[14], whereinthe Kerala High Court had permitted the request for transfer of taxliability from the head “SGST” to “IGST”, enabling the registered personto carry out rectification. The Andhra Pradesh High Court allowed thepetitioner to follow the same suit. The view taken in these decisionsthough not assailed before this Court cannot impact the logic commendedto us in this judgment on the basis of interpretation and application of therelevant provisions to the facts of this case.

43. The Delhi High Court in the present case then relied on thedecision of the Punjab & Haryana High Court in the case of AdfertTechnologies Pvt. Ltd. vs. Union of India & Ors.[15] In that case, thepetitioner was unable to file return before 31.12.2017 being the extendedtime due to heavy load upon accountants, who were having number ofassesses, lack of proper knowledge of computer system, complexity infilling different columns of TRAN-1 etc. The Punjab & Haryana HighCourt noted that GST was an electronic based tax regime and most ofpeople of India were not conversant with electronic mechanism and notable to load simple forms electronically. Be it noted that the factum ofinability to access the electronic portal to submit return within the specifiedtime due to technical faults in the portal is entirely different than theassertion to grant adjustment of amount voluntarily paid in cash by theassessee towards OTL. The latter can be allowed only if the law enactedby the Parliament expressly permitted such swapping of entries of theelectronic credit ledger vis-a-vis electronic cash ledger; and certainlynot permissible in the teeth of Section 39(9) of the 2017 Act. Relying on 13 supra at Footnote No. 10

13 supra at Footnote No. 10

14 dated 12.11.2018 in W.P.(C) No. 35868/201815 2019-TIOL-2519-HC-P&H-GST

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Athe decision of the Gujarat High Court in Siddharth Enterprises vs.The Nodal Officer[16], however, the Court noted that denial of credit oftax/duty paid under existing Acts would amount to violation of Article 14and 300A of the Constitution of India. It noted that unutilized credit hasbeen recognized as vested right and property in terms of Article 300A ofthe Constitution. This decision was on facts of that case concerningBerroneous entry recorded in Form GSTR-3B and not regarding rightasserted to swap the mode of payment of OTL in cash to be adjustedagainst electronic credit ledger as in the present case in the guise ofrectification of return filed in Form GSTR-3B for the earlier period.

44. Reference was then made to decision of this Court in MRFCLtd., Kottayam vs. Asstt. Commissioner (Assessment), Sales Tax &Ors.[17], wherein it is held that a person may have a legitimate expectationof being treated in a certain way by an administrative authority, eventhough he has no legal right in private law to receive such treatment.The High Court then referred to the decision of Delhi high Court inDKrish Authomotors Pvt. Ltd. vs. Union of India & Ors.[18], which hadpermitted the writ petitioners to either submit the TRAN-I formelectronically by opening the electronic portal or to tender the said formmanually before the specified date and thereafter to process the claimfor ITC in accordance with law. The Punjab & Haryana High Courtagreed with the view taken by the Gujarat High Court and the DelhiEHigh Court. The conclusion so recorded by the Punjab & Haryana HighCourt will have no bearing on the facts of this case in light of the opinionexpressed in this judgment, as we have held that consequent to submission/filing of Form GSTR-3B, as envisaged by the 2017 Act, it can be rectifiedonly in the manner specified in Section 39(9) read with Rule 61(5), asFapplicable at the relevant time. In other words, the rectification can bedone only in the return to be furnished in the month or quarter duringwhich such omission or incorrect particulars are noticed and not in thereturn for the period to which it relates.

45. The High Court in the impugned judgment, has also advertedGto the decisions of the Delhi High Court in Blue Bird Pure Pvt. Ltd. vs.Union of India & Ors.[19 ]and in Lease Plan India Private Limited vs.

16 2019-TIOL-2068-HC-AHM-GST17 (2006) 8 SCC 70218 2019-TIOL-2153-HC-DEL-GSTH19 2019 SCC OnLine Del 9250

Government of National Capital Territory of Delhi & Ors.[20] For thesame reasons, the conclusion reached in the said two decisions will beof no avail to respondent No. 1.

46. We need not multiply the authorities referred to in the concernedjudgments, and cited before us, as in our opinion, these decisions havenot dealt with the cardinal aspect of statutory obligation fastened uponthe registered person to maintain books of accounts and record withinthe meaning of Chapter VII of the 2017 Rules, which are primarydocuments and source material on the basis of which self-assessment isdone by the registered person including about his eligibility and entitlementto get ITC and of OTL. Form GSTR-2A is only a facilitator for taking aninformed decision while doing such self-assessment. Non-performanceor non-operability of Form GSTR-2A or for that matter, other forms, willbe of no avail because the dispensation stipulated at the relevant timeobliged the registered person to submit returns on the basis of such self-assessment in Form GSTR-3B manually on electronic platform. Theprovision contained in Section 39(9) of the 2017 Act and Rule 61 of theRules framed thereunder, as applicable at the relevant time, apply withfull vigor to the returns filed by the registered person in Form GSTR-3B.

47. Significantly, the registered person is not denied of theopportunity to rectify omission or incorrect particulars, which he coulddo in the return to be furnished for the month or quarter in which suchomission or incorrect particulars are noticed. Thus, it is not a case ofdenial of availment of ITC as such. If at all, it is only a postponement ofavailment of ITC. The ITC amount remains intact in the electronic creditledger, which can be availed in the subsequent returns including the nextfinancial year. It is a different matter that despite the availability of fundsin the electronic credit ledger, the registered person opts to dischargeOTL by paying cash. That is a matter of option exercised by the registeredperson on which the tax authorities have no control, whatsoever, northey have any role to play in that regard. Further, there is no expressprovision permitting swapping of entries effected in the electronic cashledger vis-a-vis the electronic credit ledger or vice versa.

48. A priori, despite such an express mechanism provided bySection 39(9) read with Rule 61, it was not open to the High Court toproceed on the assumption that the only remedy that can enable the 20 decided on 13.9.2019 in W.P.(C) No. 3309/2019

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Aassessee to enjoy the benefit of the seamless utilization of the input taxcredit is by way of rectification of its return submitted in Form GSTR-3B for the relevant period in which the error had occurred. Any unilateralchange in such return as per the present dispensation, would havecascading effect on the recipients and suppliers associated with theconcerned transactions. There would be complete uncertainty and noBfinality could ever be attached to the self-assessment return filedelectronically. We agree with the submission of the appellant that anyindulgence shown contrary to the statutory mandate would not only bean illegality but in reality, would simply lead to chaotic situation andcollapse of tax administration of Union, States and Union Territories.CResultantly, assessee cannot be permitted to unilaterally carry outrectification of his returns submitted electronically in Form GSTR-3B,which inevitably would affect the obligations and liabilities of otherstakeholders, because of the cascading effect in their electronic records.

49. As noted earlier, the matching and correction process happensDon its own as per the mechanism specified in Sections 37 and 38, afterwhich Form GSTR-3 is generated for the purposes of submission ofreturns; and once it is submitted, any changes thereto may have cascadingeffect. Therefore, the law permits rectification of errors and omissionsonly at the initial stages of Forms GSTR-1 and GSTR-3, but in thespecified manner. It is a different dispensation provided than the one inEpre-GST period, which did not have the provision of auto-populatedrecords and entries.

50. Suffice it to conclude that the challenge to the impugnedCircular No. 26/26/2017-GST dated 29.12.2017, is unsustainable for thereasons noted hitherto. We hold that stipulations in the stated CircularFincluding in paragraph 4 thereof, are consistent with the provisions ofthe 2017 Acts and the Rules framed thereunder. Having said that, itmust follow that there is no necessity of reading down paragraph 4 ofthe impugned Circular as has been done by the High Court vide impugnedjudgment. In any case, the direction issued by the High Court being inGthe nature of issuing writ of mandamus to allow the writ petitioner torectify Form GSTR-3B for the period - July to September 2017, in theteeth of express statutory dispensation, cannot be sustained.

51. No other issue has been dealt with by the High Court exceptto read down of the stated Circular, which as aforesaid, is whollyHunnecessary.

52. In view of the above, this appeal is allowed. The impugnedjudgment and order is set aside. Resultantly, the writ petition filed byrespondent No. 1 before the High Court stands dismissed. There shallbe no order as to costs.

All applications stand disposed of.

Ankit Gyan

Appeal allowed.

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