Genuine mistake should be given opportunity to correct : Bombay High Court

- Sales Tax - Soham Mashruwala

Under the GST Act, there is an overriding requirement of accounts that there should be no errors in the forms. Many a times, despite care, wrong GST number is entered while detailing external supply in the forms, resulting in difficulty for the recipient to claim his tax credit. Changes cannot be made on the GST portal if the time limit for making this amendment has passed. Due to this, the recipient is not liable to tax under Rule 36(4). In such a situation, if no opportunity is given to correct the GSTR1 form, a dire situation will arise. To resolve this, the government through a circular clarified that the tax claim can be allowed through the certificate of a chartered accountant for the period till December 2021, since the concept of GSTR2B has been introduced, the tax claim based on such certificate is considered invalid. A dilemma arises as to what to do in such a dire situation. For the period till GSTR2B came in, the Bombay High Court has recently given a noble judgment in Star Engineers (E) Pvt. Ltd. (WP No. 15368 of 2023) which is discussed in today's article.

The facts of the case

There was an error in filling the GSTR1 form by the applicant in July 2021, November 2021, and January 2022. Show the details of external supply in the GSTR1 form by showing the GSTIN of the person to whom the goods were sent. When the actual purchaser was a different person who asked the petitioner to send the goods to the affected person. The time limit for GSTR1 amendment was over when this error was noticed. The petitioner's customer had recovered the amount by issuing a debit note. A letter was written to the area officer to solve this problem, which was answered in the negative. A writ was filed before this in the Bombay High Court.

Presentation of the applicant

It was submitted by the applicant that the application has been rejected by the officer due to technical reasons. There is no malicious intent or tax evasion or any loss of money to the government. It has been held by various High Courts that an opportunity to correct the mistake should be given in cases where a mistake has actually been made and not knowingly made which results in a mismatch of the tax claim.

Judgment of the Bombay High Court

The Bombay High Court observed that the object of the Act would be defeated and double taxation would result if no opportunity for this amendment was given. No one will benefit illegally by making this amendment. In the present case a bona fide mistake has been made and an opportunity to rectify such mistake should be given by the account with open heart so as not to lead to unnecessary arbitration. Thus, it is decided to provide the facility to edit the form either online or physically.