Principal Chief Commissioner of GST and Central Excise Vs Deepa Traders
Date: April 1, 2025
Subject Matter
Taxpayers must be permitted the benefit of rectification of errors in returns where there is no malafides attributed to the taxpayer
Summary
The case involves a petitioner seeking to rectify errors they made in their GST returns for the financial year 2017-18, which were identified in December 2019. The mistakes were attributed to the carelessness of a part-time accountant and included incorrect GSTIN, invoice details, and improper reporting of IGST under SGST and CGST. The petitioner claimed these errors were unintentional and occurred during the early implementation phase of GST when they lacked familiarity with the reporting requirements. When the errors were discovered, the petitioner attempted to amend the returns but found no mechanism available for correction under the GST Act. They argued that their tax liability had been met fully based on the turnover reported. The learned Single Judge permitted rectification based on previous judgments which recognized the right to correct genuine mistakes. However, the appeal contested that the allowable rectification period had expired based on Section 37(3), linking it to timelines set out in notifications and prior court decisions. Ultimately, the appeal was dismissed, affirming the right to rectify honest errors under reasonable circumstances as noted by the Supreme Court's remarks on human errors and software limitations not justifying denial of corrections.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
WMP No.8682 of 2025 filed to condone the delay of 86 days in filing the appeal and WMP No.8684 of 2025 filed to condone the delay of 540 days in paying deficit Court fees stand allowed.
2. The appeal impugns an order dated 9 March 2023 passed by the learned Single Judge, in which para-graphs 2 to 6 read as under:
“2. The petitioner has, in respect of the returns for a few months during the period 2017~18, admittedly, committed certain errors. The errors are of following nature.
(i) Recipients GSTIN/name has been wrongly mentioned.
(ii) The invoice number/date have been wrongly mentioned.
(iii) Supply details were correctly supplied in GSTR 3 and tax duly remitted. However, some of the invoice wise details have been omitted to be reported in Form GSTR 1.
(iv) IGST was inadvertently remitted under the heads SGST and CGST.
3. The aforesaid errors are attributed to inadvertent carelessness on the part of a part-time accountant then employed by the petitioner. The petitioner would also state that the errors had been occasioned during the initial months of implementation of Goods and Services Tax and thus it had also no knowledge of the conditions fully to meet the demands of the system. It was the unfamiliarity with the procedures and the newness in the system itself that had resulted in the commission of these errors.
4. It was only in December, 2019 that the petitioner states that these errors came to light on account of the customers bringing the same to its attention. Admittedly, no details of such reports by the customers have been placed on file, though the averment figures at para-graph Nos. 5 and 6 of the affidavit of the petitioner. At paragraph 7, the petitioner states that immediately on coming to know of the errors, an attempt was made to rectify the returns only to find that there was no mechanism set out under the Act or in the portal to enable the same.
5. To be noted, that the petitioner has averred that the tax liability has been met in full based on the turnover reported and it is only the correction of the errors that is sought, to enable proper reconciliation of the petitioner-s returns and annexures with those of the third parties.
6. Though a counter has been filed, the above contentions reproduced as per paragraphs 5 to 8 of the affidavit filed in support of the Writ Petition, have not really been disputed.
3. In paragraph 7, it is noted that learned Senior Standing Counsel did not raise any dispute on the sequence of events as narrated above, but submitted that there was no mechanism available as on that date to issue mandamus as sought, i.e., to direct respondents (appellants herein) to enable petitioner (respondent herein) to rectify the clerical errors in the details uploaded by petitioner (respondent here-in) in its GSTR 1 forms for the year 2017-18 by amending the Forms.
4. Learned Single Judge relying on judgment of Sun Dye Chem V. Assistant Commission-er1and Pentacle Plant Machineries Pvt. Ltd. V. Office of the GST Council, New Delhi2, permitted the benefit of rectification of errors as there was no mala fides attributed to the assessee. The Court found that the errors are clearly inadvertent and that the rectification would, in fact, enable prop-er reporting of the turnover and input tax credit to enable claims to be made in an appropriate fashion by
5. In the appeal, the ground taken primarily is that Section 37(3) of the Central Goods and Services Tax Act, 2017, provides for rectification of error or any omission in a return filed under Section 37(1) of the Act and the proviso therein states that no rectification of error or omission shall be allowed after furnishing of the return under Section 39 of the Act in the month of September following the end of the financial year to which such details pertain, or the filing of the annual return, whichever is earlier.
6. Shri Srinivas submitted that for assessment year 2017-18, the Central Goods and Services Tax (Second Removal of Difficulties) Order, 2018 dated 31.12.2018 extended the last date for amendment to the date on which return for March 2019 falls due. He submitted that the last date for filing returns for March 2019 was extended to 23.04.2019 as per notification dated 22.04.2019 and, therefore, be-yond that date, tax payer cannot amend the returns pertaining to the period 2017-18.
7. The Bombay High Court in the case of Aberdare Technologies W.A.No.1091 of 2025 Pvt. Ltd. and ors. vs. Central Board of Indirect Taxes & Cusoms and Ors.3, had allowed the assessee to amend/rectify the form GSTR 1. Against that order, a special leave petition was referred by the Revenue, which came to be dismissed vide order dated 21 March 2025. While dismissing the SLP, the Apex Court was pleased to observe as under:
“The petitioner, Central Board of Indirect Taxes and Customs, must re-examine the provisions /time lines fixed for correcting the bonafide errors. Time lines should be realist as lapse/defect invariably is realized when input tax credit is denied to the purchaser when benefit of tax paid is denied. Purchaser is not at fault, having paid the tax amount. He suffers because he is denied benefit of tax paid by him. Consequently, he has to make double payment. Human errors and mistakes are normal, and errors are also made by the Revenue. Right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software are meant to ease compliance and can be configured. Therefore, we exer-cise our discretion and dismiss the special leave petition.
Decisions of the High Courts in Bar Code India Limited v. Union of India and others (2024) SCC Online P&H 13853 and Yokohama India Private Ltd vs. State of Telengana (2023 108 GSTR 115, prima facie, do not lay down good law in this regard. Ratio therein may be examined in another case.”
8. As held by the Apex Court, human errors and mistakes are normal, and errors are also made by the Revenue. The right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from the right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software is meant to ease compliance and can be configured.
9. Therefore, appeal stands dismissed. There will be no order as to costs. Consequently, CMP No.8685 of 2025 stands disposed of.
Notes :-
1 2021 (44) GSTL 358
2 2021 (52) GSTL 129
3 (2024) 105 GST 585 (Bombay)