GSTR-3B Rectification Allowed When Figures Don’t Tally with GSTR-1 Due to Inadvertent Error

GSTR-3B Rectification Allowed When Figures Don’t Tally with GSTR-1 Due to Inadvertent Error

Issue:

Whether an assessee is entitled to rectify their GSTR-3B return to align with the figures declared in GSTR-1, especially when the discrepancy arose from an inadvertent error in filing GSTR-3B, and whether a demand order based on such an unrectified return is valid.

Facts:

For the month of April 2019, the assessee filed their GSTR-1 on May 10, 2019, and GSTR-3B on June 20, 2019. While filing GSTR-3B, the assessee inadvertently entered wrong figures. The assessee subsequently submitted an application to rectify the GSTR-3B to bring it on par with the figures mentioned in GSTR-1. However, this application was rejected. Following the rejection, the concerned authority passed an impugned order raising a demand for tax, interest, and penalty for April 2019, arising solely from the mistakes in the initially filed GSTR-3B. The assessee challenged this demand order through a writ petition.

Decision:

The court held in favor of the assessee. It found that the case involved an inadvertent error committed by the assessee while filling up certain figures in the GSTR-3B return, which resulted in a mismatch with GSTR-1. To that extent, the assessee’s request was for the rectification of this error. The court concluded that the assessee had made out a valid case for interference with the impugned order. Therefore, the concerned authority was directed to rectify the GSTR-3B on par with the contents of GSTR-1.

Key Takeaways:

• Rectification of Inadvertent Errors: The judgment emphasizes that inadvertent or clerical errors in GST returns (like GSTR-3B) should be allowed to be rectified, especially when they are demonstrably contrary to other filed returns (like GSTR-1) for the same period.
• GSTR-1 as Basis: GSTR-1 primarily reflects outward supplies and serves as the basis for calculating output tax liability. GSTR-3B is a summary return for payment of tax. Where there’s a clear discrepancy due to an error, GSTR-1 often serves as the correct record.
• Prevention of Undue Hardship: Denying rectification for genuine, inadvertent errors would lead to undue hardship for taxpayers by imposing demands based on incorrect figures, even when the correct figures are available in other official filings.
• Spirit of GST Law: The GST regime aims for self-assessment and compliance. Allowing rectification of genuine errors aligns with the principle of facilitating correct tax payment rather than penalizing for minor, rectifiable mistakes.
• Writ Jurisdiction: The court exercised its writ jurisdiction to correct a manifest injustice, where the authority failed to consider the genuine nature of the error and the availability of correct information.
• Direction to Rectify: Instead of merely quashing the demand, the court affirmatively directed the authority to rectify the GSTR-3B, ensuring that the assessee’s records are brought in line with the correct tax position.