Goods & Services Tax (GST) in IndiaTaxRectification of GST Returns Permitted Despite Statutory Deadline for Bona Fide Errors

The Hon’ble High court of Bombay, in the case of Aberdare Technologies Pvt. Ltd & Anr vs. Central Board of Indirect Taxes & Customs & Ors. , Writ Petition Numbers 7912 of 2024 decided on 29.07.2024, permitted to rectify errors in its GST returns, even after the statutory deadline under Section 39(9) of the CGST Act.

FACTS

Aberdare Technologies Pvt. Ltd & Anr, (hereinafter referred to as “the Petitioner”) has filed their Goods and Service Tax (hereinafter referred to as “GST”) returns within time prescribed under the Central Goods and Service Tax Act, 2017 (hereinafter referred to as “CGST”).

In December, 2023, the company discovered that some errors had been made in the originally filed GST returns. These errors were related to the Input Tax Credit (hereinafter referred to as “ITC”) mismatch likely due to wrong GSTIN entries in Form GSTR-1 and GSTR-3B.

The Petitioner and Central Board of Indirect Taxes & Customs & Ors. (hereinafter referred to as “the Respondents”) both agreed that errors were related to incorrect entries and it was a bona fide mistake and it did not lead to any loss of revenue to the government.

The Petitioner missed the deadline by the time they discovered the problem, as taxpayers are only permitted to correct errors up until November 30 of the subsequent fiscal year, according to Section 39(9) of the CGST Act.

The Petitioner submitted as written request to the GST authorities asking for permission to rectify the errors. However, no approval was granted and no formal action was taken and request was declined due to limitation period u/s 39(9) of CGST Act.

Thus aggrieved by this, the Petitioner filed a writ petition before the Hon’ble High Court of Bombay.

ISSUES BEFORE THE SUPREME COURT

• Whether the petitioner can be allowed to amend/rectify GSTR-1 and GSTR-3B beyond the statutory time limit under Section 39(9) of the CGST Act?
• Does the absence of any loss of revenue justify relaxing the deadline for correction of returns?
• Whether strict procedural compliance should override substantive justice in cases of unintentional errors?

CONTENTIONS OF THE PARTIES

The Petitioners submitted that they are duly registered under the Central Goods and Services Tax Act, 2017 and have been timely and regularly filing their GST returns.

The Petitioner submitted that errors were purely unintentional and bona fide, and at no point did they result in any loss of revenue to the Government exchequer, nor was any undue benefit obtained by the Petitioners.

Further, the Petitioners submit that the rigid restriction imposed under Section 39(9) defeats the purpose of fair tax administration and should not stand in the way of correcting a bona fide and revenue-neutral error which does not affect the integrity of the tax system.

The Petitioners relied upon the judgment of the Hon’ble Bombay High Court in Star Engineers Pvt. Ltd. v. Union of India, WP No. 15368 of 2023, where the Hon’ble Court has ruled that, in cases where there is no revenue loss and the error is unintentional, changes to Form GSTR-1 shall be allowed even after the deadline.

On the contrary, the Respondents argued that the GST laws doesn’t permit rectification of returns after the prescribed deadline i.e. 30^th November of the next financial year.

Further, the Respondent argues that they have no discretion under the CGST Act to override or relax the timeline set out by the statute.

DECISION AND FINDINGS

The Hon’ble Bombay High Court allowed the writ petition filed by the Petitioner, holding that the company should be permitted to rectify errors in its GST returns, GSTR-1 even after the statutory deadline under Section 39(9) of the CGST Act, since the mistake was bona fide and caused no loss to the revenue. The Court emphasized a purposive interpretation of GST law, stating that technical deadlines should not prevent correction of genuine errors, especially in a technology-driven regime like GST where accurate filings are critical. It directed the authorities to open the GST portal within a week to enable rectification, or alternatively, accept a manual correction and process it in accordance with law, reinforcing the principle that justice and correct tax reporting must prevail over rigid procedural constraints.

AMLEGALS REMARKS

The Hon’ble High Court of Bombay rightly emphasized that technical deadlines shouldn’t override justice, especially when there’s no loss to the revenue and has established a strong precedent for taxpayers and their rights under GST regime. The ruling stands out for its fairness and practicality and reliance on the principle of natural justice.

The Hon’ble Court’s acknowledged the evolving nature of the GST system and the need for flexibility in accommodating genuine human errors. The decision also reflects a growing judicial trend to make tax administration more taxpayer-friendly and less adversarial. This judgment strikes the right balance between compliance and compassion, setting a strong precedent for similar future cases. It not only protects the interests of honest taxpayers but also promotes greater trust in the legal and taxation framework.

Team AMLEGALS assisted by Ms. Khushi Jain (Intern)

For any query or feedback, please feel free to get in touch with laksha.bhavnani@amlegals.com or hiteashi.desai@amlegals.com