SC disallowed Bharti Airtel from seeking ₹ 923 Crore GST refund by rectifying return

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The Honorable Supreme Court of India in the matter of Union of India v. Bharti Airtel Ltd. and Others [CIVIL APPEAL NO. OF 2021 (ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020) dated October 28, 2021] barred telecom major Bharti Airtel (“the Respondent”) from seeking Goods and Services Tax (“GST”) refund of ₹ 923 crore by rectifying return.

Facts- The brief facts of the case were that the Respondent was facing several problems while their filing of GSTR Form 3B due to the several glitches that were occurring in the Online GST Portal. Amidst these glitches, the Respondent filed their GST returns for the period of July, 2017 to September, 2017 with excess amount of ₹ 923 Crores and therefore, they have sought the refund accordingly.

The Delhi High Court [W.P. (C) No. 6345 of 2018 dated May 05, 2020] – Held that the rectification of the return for that very month to which it relates was imperative and, accordingly, read down para 4 of the Circular No. 26/26/2017-GST dated December 29, 2017 to the extent that it restricts the rectification of Form GSTR-3B in respect of the period in which the error has occurred.

Accordingly, the Delhi HC allowed the present petition and permitted the Respondent to rectify Form GSTR-3B for the period to which the error relates, i.e. the period from July, 2017 to September, 2017. The Delhi HC also directed the Respondents that on filing of the rectified Form GSTR-3B, they shall, within a period of two weeks, verify the claim made therein and give effect to the same once verified.

In July 2020, the Central Government (“the Appellant”) moved to the Supreme Court challenging the Delhi HC order of grant of refund. While authorities claimed the Respondent had under-reported Input Tax Credit (“ITC”) from July, 2017 to September 2017, the Respondent said it had paid excess tax of ₹ 923 Crore on inputs based on estimates since the Form GSTR-2A was not operational during the error period.

The Supreme Court [CIVIL APPEAL NO. OF 2021 (ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020)] Allowed the Appellant’s plea against the Delhi HC Order that had directed to issue the tax refund to the Respondent by rectifying its GST return for July, 2017 to September 2017 and observed as under:

 “despite…an express mechanism provided by Section 39(9) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) read with Rule 61 of the Central Goods and Services Tax Act, 2017 (“the CGST Rules”) it was not open to the High Court to proceed on the assumption that the only remedy that can enable the Respondent to enjoy the benefit of the seamless utilization of the ITC is by way of rectification of its return submitted in Form GSTR 3B for the relevant period in which the error had occurred. Any unilateral change in such return as per the present dispensation, would have cascading effect on the recipients and suppliers associated with the concerned transactions”.

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