# UNION OF INDIA v. BHARTI AIRTEL LTD. & ORS

- **Citation:** [2021] 10 S.C.R. 825
- **Court:** Supreme Court of India
- **Decided:** 2021-10-28
- **Case number:** Civil Appeal No. 6520 of 2021
- **Bench:** A.M. Khanwilkar, Dinesh Maheshwari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-bharti-airtel-ltd-ors-34727
- **Pages:** 39

## Headnote

Central Goods and Services Tax Act, 2017 - ss. 16, 39, 49,
59 and 168 - Central Goods and Services Tax Rules, 2017 -
Circular dated 29.12.2017 issued by the Commissioner (GST) -
Validity of - Act of 2017 and Rules of 2017 brought into force along
with Forms GSTR-1, GSTR-2, GSTR-2A, GSTR-3 and GSTR-3B -
Various notifications were issued - In exercise of the powers
conferred by Rule 61(5) of the stated Rules, the Central Government
issued Notification No.21/2017-Central Tax specifying that the return
for the months of July and August 2017 to be furnished in Form
GSTR-3B electronically through the common portal before the dates
as specified in the corresponding entry in column (3) of the table
given therein - Thereafter again various notifications/circulars were
regarding extension of time (notification dated 17.08.2017), relating
to system-based reconciliation of information furnished in Forms
GSTR-1, GSTR-2 and GSTR-3B and the mechanism for correction
of erroneous details furnished in Form GSTR-3B, specifying the
timeline for filing of return in Form GSTR-3B (circular dated
01.09.2017) etc. were issued - The Commissioner (GST) then issued
the circular dated 29.12.2017, on the subject of filing of returns
under GST, clarifying certain issues considered by the Central Board
of Indirect Taxes and Customs to usher in uniformity in
implementation across field formations - By this Circular, the earlier
Circular issued on 01.09.2017 was kept in abeyance - Paragraph
4 of the Circular dated 29.12.2017 specifies "...It may be noted
that while making adjustment in the output tax liability or input tax
credit, there can be no negative entries in the FORM GSTR-3B -
The amount remaining for adjustment, if any, may be adjusted in
the return(s) in FORM GSTR-3B of subsequent month(s) and, in
cases where such adjustment is not feasible, refund may be
claimed..." - Respondent No. 1 was, however, keen on availing of
the dispensation specified in the Circular dated 01.09.2017 for the
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relevant period (July to September 2017) - After Form GSTR-2A
became operational in September 2018, respondent No. 1 realized
that it had sufficient amount in the ITC ledger account (electronic
credit ledger) during the relevant period - Further, due to nonfunctionality of GSTR-2A, respondent No. 1 had to discharge its
OTL by depositing/paying in cash - Respondent No.1 urged to rectify
Form GSTR-3B - However, the impugned Circular dated 29.12.2017
came in the way of respondent No. 1 in doing so - Resultantly,
respondent No.1 approached the High Court by way of writ petition
- High Court allowed the writ petition and read down paragraph 4
of circular dated 29.12.2017 to the extent it restricted the
rectification of Form GSTR-3B in respect of period in which the
error had occurred - Before the Supreme Court respondent no. 1
contended that the circular dated 29.12.2017 was issued without
any authority of law - Held: The decision was taken by the Board
after considering various representations received seeking
clarifications on various aspects of return filing such as return filing
dates, applicability of quantum of late fee, amendment of errors in
submitting/filing of Form GSTR-3B and other related queries - In
strict sense, it is not the direction issued by the Commissioner (GST)
as such, but it is notifying the decision(s) of the Board taken in
exercise of its powers conferred u/s. 168(1) of the 2017 Act - The
circular was issued under the signatures of Commissioner (GST),
but in essence, it was notifying the decision(s) of the Board, which
has authority and power to issue directions - The stipulations in
the stated circular including paragraph 4 are consistent with the
provisions of the 2017 Act and the Rules - The express provision in
the form of s. 39(9) clearly posits that omission or incorrect
particulars furnished in the return in Form GSTR-3B can be corrected
in the return to be furnished in the month or

## Text

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[2021] 10 S.C.R. 825
825
UNION OF INDIA
v.
BHARTI AIRTEL LTD. & ORS.
(Civil Appeal No. 6520 of 2021)
OCTOBER 28, 2021
[A.M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Central Goods and Services Tax Act, 2017 - ss. 16, 39, 49,
59 and 168 - Central Goods and Services Tax Rules, 2017 -
Circular dated 29.12.2017 issued by the Commissioner (GST) -
Validity of - Act of 2017 and Rules of 2017 brought into force along
with Forms GSTR-1, GSTR-2, GSTR-2A, GSTR-3 and GSTR-3B -
Various notifications were issued - In exercise of the powers
conferred by Rule 61(5) of the stated Rules, the Central Government
issued Notification No.21/2017-Central Tax specifying that the return
for the months of July and August 2017 to be furnished in Form
GSTR-3B electronically through the common portal before the dates
as specified in the corresponding entry in column (3) of the table
given therein - Thereafter again various notifications/circulars were
regarding extension of time (notification dated 17.08.2017), relating
to system-based reconciliation of information furnished in Forms
GSTR-1, GSTR-2 and GSTR-3B and the mechanism for correction
of erroneous details furnished in Form GSTR-3B, specifying the
timeline for filing of return in Form GSTR-3B (circular dated
01.09.2017) etc. were issued - The Commissioner (GST) then issued
the circular dated 29.12.2017, on the subject of filing of returns
under GST, clarifying certain issues considered by the Central Board
of Indirect Taxes and Customs to usher in uniformity in
implementation across field formations - By this Circular, the earlier
Circular issued on 01.09.2017 was kept in abeyance - Paragraph
4 of the Circular dated 29.12.2017 specifies "...It may be noted
that while making adjustment in the output tax liability or input tax
credit, there can be no negative entries in the FORM GSTR-3B -
The amount remaining for adjustment, if any, may be adjusted in
the return(s) in FORM GSTR-3B of subsequent month(s) and, in
cases where such adjustment is not feasible, refund may be
claimed..." - Respondent No. 1 was, however, keen on availing of
the dispensation specified in the Circular dated 01.09.2017 for the
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relevant period (July to September 2017) - After Form GSTR-2A
became operational in September 2018, respondent No. 1 realized
that it had sufficient amount in the ITC ledger account (electronic
credit ledger) during the relevant period - Further, due to nonfunctionality of GSTR-2A, respondent No. 1 had to discharge its
OTL by depositing/paying in cash - Respondent No.1 urged to rectify
Form GSTR-3B - However, the impugned Circular dated 29.12.2017
came in the way of respondent No. 1 in doing so - Resultantly,
respondent No.1 approached the High Court by way of writ petition
- High Court allowed the writ petition and read down paragraph 4
of circular dated 29.12.2017 to the extent it restricted the
rectification of Form GSTR-3B in respect of period in which the
error had occurred - Before the Supreme Court respondent no. 1
contended that the circular dated 29.12.2017 was issued without
any authority of law - Held: The decision was taken by the Board
after considering various representations received seeking
clarifications on various aspects of return filing such as return filing
dates, applicability of quantum of late fee, amendment of errors in
submitting/filing of Form GSTR-3B and other related queries - In
strict sense, it is not the direction issued by the Commissioner (GST)
as such, but it is notifying the decision(s) of the Board taken in
exercise of its powers conferred u/s. 168(1) of the 2017 Act - The
circular was issued under the signatures of Commissioner (GST),
but in essence, it was notifying the decision(s) of the Board, which
has authority and power to issue directions - The stipulations in
the stated circular including paragraph 4 are consistent with the
provisions of the 2017 Act and the Rules - The express provision in
the form of s. 39(9) clearly posits that omission or incorrect
particulars furnished in the return in Form GSTR-3B can be corrected
in the return to be furnished in the month or quarter during which
such omission or incorrect particulars are noticed - Accordingly,
the argument that the impugned Circular dated 29.12.2017 was
issued without authority of law is rejected.
Central Goods and Services Tax Act, 2017 - ss. 16, 39, 49
and 59 - Central Goods and Services Tax Rules, 2017 - rr. 59, 60
and 61 - Rectification of Form GSTR-3B - The grievance of the
writ petitioner-respondent no.1 before the High Court was that due
to non-operability of Form GSTR-2A at the relevant time (July to
September 2017), it was denied of access to the information about
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its electronic credit ledger account and consequently, availing of
Input Tax Credit (ITC) for the relevant period and instead to
discharge the Output Tax Liability (OTL) by paying cash to its
vendors - Thus, it has resulted in payment of double tax and unfair
advantage to the tax authorities because of their failure to
operationalize the statutory forms enabling auto-populating
statement of inward supplies of the recipient and outward supplies
including facility of matching and correcting the discrepancies
electronically - The High Court allowed the writ petition for the
period to which the 'error relates' i.e. July to September 2017 -
High Court also allowed writ petitioner to rectify Form GSTR-3B
for the period in which error had occurred - On appeal, held: The
writ petitioner being a registered person, was under a legal
obligation to maintain books of accounts and records as per the
provisions of the 2017 Act and Chapter VII of the 2017 Rules
regarding the transactions in respect of which the OTL would occur
- Even in the past (till recently upto the 2017 Act came into force),
during the pre-GST regime, the writ petitioner (being registered
person/assessee) had been maintaining such books of accounts and
records and submitting returns on its own - No such auto-populated
electronic data was in vogue - It is the same pattern which had to
be followed by the registered person in the post-GST regime -
Further, as per scheme of the 2017 Act, registered person is obliged
to do self-assessment of ITC, reckon its eligibility to ITC and of
OTL including the balance amount lying in cash or credit ledger
primarily on the basis of his office record and books of accounts
required to be statutorily preserved - That he could do without the
common electronic portal as was being done in the past till recently
pre-GST regime - The factum of non-operability of Form GSTR-2A,
therefore, is a flimsy plea taken by the writ petitioner - The writ
petitioner with full knowledge and information had done selfassessment and assessed the OTL for the relevant period and chose
to discharge the same by paying cash - Having so opted, now it
was not open to the respondent to resile from option already
exercised - As far as rectification of errors is concerned, the matching
and correction process happens on its own as per mechanism
specified in ss.37 and 38, after which Form GSTR-3 is generated
for the submission of returns; and once submitted any changes may
have a cascading effect - Therefore, law permits rectification of
error and omissions only at the initial stages of Form GSTR-1 and
UNION OF INDIA v. BHARTI AIRTEL LTD. & ORS.
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GSTR-3, but in a specified manner - The direction of the High Court
to allow the rectification cannot be sustained - The impugned
judgment and order of the High Court is set aside.
Allowing the appeal, the Court
HELD: 1. At the outset, the preliminary issue raised by
the appellant regarding jurisdiction of the Delhi High Court to
entertain the writ petition or that the writ petition suffered from
the vice of non-joinder of the necessary parties including that
the High Court could not have issued a writ of mandamus, need
not detain us. As regards the jurisdiction of the Delhi High Court,
the registered office of respondent No. 1 is in Delhi. The appellant
(respondent in the writ petition) also has its office in Delhi. The
relief claimed in the writ petition amongst others, was to challenge
provisions of the central Act and the circulars issued by the
competent authority having its office in Delhi. Hence, the
jurisdiction of the Delhi High Court cannot be a matter of any
doubt. Similarly, the argument of the appellant that State
Governments/Union Territories are necessary parties, does not
take the matter any further. As aforesaid, the writ petitioner was
not challenging the individual action of the States or the Union
Territories, but a policy decision of the Central authority who
had issued the impugned Circular, namely, the Commissioner
(GST). If the writ petitioner succeeded in that challenge, the
consequential relief would follow. In opinion of this Court, nonimpleadment of respective States/Union Territories would not
come in the way of the writ petitioner to pursue the cause brought
before the High Court by way of subject writ petition. If the
conclusion reached by the High Court regarding the efficacy of
impugned Circular was to be upheld, no fault can be found with
the directions issued. Accordingly, the preliminary objections
regarding the maintainability of the writ petition and the
jurisdiction of the Delhi High Court deserve to be rejected.
[Para 30][852-H; 853-A-E]
2. Another issue that needs to be decided at the threshold
is whether the impugned Circular dated 29.12.2017 issued by
the Commissioner (GST) is without authority of law. Indisputably,
the Circular has been issued to notify the clarification given by
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the Board in exercise of its powers conferred under Section 168(1)
of the 2017 Act in order to consolidate the information in various
notifications and circulars regarding return filing and to ensure
uniformity in implementation across field formations. The decision
was taken by the Board after considering various representations
received seeking clarifications on various aspects of return filing
such as return filing dates, applicability of quantum of late fee,
amendment of errors in submitting/filing of Form GSTR-3B and
other related queries. In strict sense, it is not the direction issued
by the Commissioner (GST) as such, but it is notifying the
decision(s) of the Board taken in exercise of its powers conferred
under Section 168(1) of the 2017 Act. It is a different matter that
a circular is issued under the signatures of Commissioner (GST),
but in essence, it is notifying the decision(s) of the Board, which
has had authority and power to issue directions. Accordingly, the
argument that the impugned Circular dated 29.12.2017 has been
issued without authority of law, needs to be rejected.
[Para 31][853-E-H; 854-A]
3. Reverting to the analysis of the issues and contentions
done by the High Court, it is primarily focused on the grievance
of the writ petitioner that due to non-operability of Form GSTR2A at the relevant time (July to September 2017), it had been
denied of access to the information about its electronic credit
ledger account and consequently, availing of ITC for the relevant
period and instead to discharge the OTL by paying cash to its
vendors. Thus, it has resulted in payment of double tax and unfair
advantage to the tax authorities because of their failure to
operationalize the statutory forms enabling auto-populating
statement of inward supplies of the recipient and outward supplies
including facility of matching and correcting the discrepancies
electronically. The High Court, however, did not enquire into
the cardinal question as to whether the writ petitioner was
required to be fully or wholly dependent on the auto generated
information in the electronic common platform for discharging
its obligation to pay OTL for the relevant period between July
and September 2017. The answer is - an emphatic No. In that,
the writ petitioner being a registered person, was under a legal
obligation to maintain books of accounts and records as per the
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provisions of the 2017 Act and Chapter VII of the 2017 Rules
regarding the transactions in respect of which the OTL would
occur. Even in the past (till recently upto the 2017 Act came into
force), during the pre-GST regime, the writ petitioner (being
registered person/assessee) had been maintaining such books
of accounts and records and submitting returns on its own. No
such auto-populated electronic data was in vogue. It is the same
pattern which had to be followed by the registered person in the
post-GST regime. [Para 32][854-B-F]
4. As per the scheme of the 2017 Act, it is noticed that
registered person is obliged to do self-assessment of ITC, reckon
its eligibility to ITC and of OTL including the balance amount
lying in cash or credit ledger primarily on the basis of his office
record and books of accounts required to be statutorily preserved
and updated from time to time. That he could do even without
the common electronic portal as was being done in the past till
recently pre-GST regime. As regards liability to pay OTL, that is
on the basis of the transactions effected during the relevant period
giving rise to taxable event. The supply of goods and services
becomes taxable in respect of which the registered person is
obliged to maintain agreement, invoices/challans and books of
accounts, which can be maintained manually/electronically. The
common portal is only a facilitator to feed or retrieve such
information and need not be the primary source for doing selfassessment. The primary source is in the form of agreements,
invoices/challans, receipts of the goods and services and books
of accounts which are maintained by the assessee manually/
electronically. These are not within the control of the tax
authorities. This was the arrangement even in the pre-GST
regime whilst discharging the obligation under the concerned
legislation(s). The position is no different in the post-GST regime,
both in the matter of doing self-assessment and regarding dealing
with eligibility to ITC and OTL. Indeed, that self-assessment
and declarations would be any way subject to verification by the
tax authorities. The role of tax authorities would come at the
time of verification of the declarations and returns submitted/
filed by the registered person. [Para 33][854-F-H; 855-A-C]
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5. Section 16 of the 2017 Act deals with eligibility of the
registered person to take credit of input tax charged on any supply
of goods or services or both to him which are used or intended to
be used in the course or furtherance of his business. The input
tax credit is additionally recorded in the electronic credit ledger
of such person under the Act. The "electronic credit ledger" is
defined in Section 2(46) and is referred to in Section 49(2) of the
2017 Act, which provides for the manner in which ITC may be
availed. Section 41(1) envisages that every registered person
shall be entitled to take credit of eligible input tax, as
self-assessed, in his return and such amount shall be credited on
a provisional basis to his electronic credit ledger. [Para 34]
[855-D-E]
6. Section 59 does make reference to Section 39, which
deals with furnishing of returns, but the fact remains that for
furnishing of returns, preparatory work has to be done by the
assessee himself and is not fully or wholly dependent on the
common electronic portal for that purpose. Just couple of weeks
before the relevant period between July and September 2017,
the writ petitioner/respondent No. 1 had been doing that exercise
which it was expected to continue even under the post-GST
scheme. The factum of non-operability of Form GSTR-2A,
therefore, is flimsy plea taken by the writ petitioner/respondent
No. 1. Indeed, if the stated form was operational, the same would
have come handy to the writ petitioner for doing self-assessment
regarding eligibility of ITC and availing thereof. But it is a feeble
excuse given by the writ petitioner/respondent No. 1 to assail
the condition specified in impugned Circular dated 29.12.2017
regarding the rectification of the return submitted manually in
Form GSTR-3B for the relevant period (July to September 2017).
[Para 36][856-A-D]
7. The question of reading down paragraph 4 of the said
Circular would have arisen only if the same was to be in conflict
with the express provision in the 2017 Act and the Rules framed
thereunder. The express provision in the form of Section 39(9)
clearly posits that omission or incorrect particulars furnished in
the return in Form GSTR-3B can be corrected in the return to
be furnished in the month or quarter during which such omission
or incorrect particulars are noticed. This very position has been
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restated in the impugned Circular. It is, therefore, not contrary
to the statutory dispensation specified in Section 39(9) of the
Act. The High Court, however, erroneously noted that there is
no provision in the Act, which restricts such rectification of the
return in the period in which the error is noticed. [Para 37]
[856-D-F]
8. The entire edifice of the grievance of the writ petitioner
(respondent No. 1) was founded on non-operability of Form GSTR2A during the relevant period, which plea having been rejected
as untenable and flimsy, it must follow that the writ petitioner/
respondent No. 1 with full knowledge and information derived
from its books of accounts and records, had done self-assessment
and assessed the OTL for the relevant period and chose to
discharge the same by paying cash. Having so opted, it is not
open to the respondent to now resile from the legal option already
exercised. It is for that reason, the respondent has advisedly
propounded a theory that in absence of (electronic-auto populated
record) mechanism made available as per Sections 37 and 38,
return filed in Form GSTR-3B is not ascribable to Section 39(9)
of the 2017 Act read with Rule 61(5) of the 2017 Rules. This is
yet another untenable plea taken by respondent No. 1. For, the
appellant having realized that the mechanism specified in Sections
37 and 38 of the 2017 Act cannot be put in place due to nonoperability of the forms governing such mechanism, had to amend
the rules to make a stop-gap arrangement until the entire
mechanism became operational. Appellant not only amended the
statutory rule but also provided for filing of return manually in
Form GSTR-3B electronically through the common portal with
effect from July 2017. This is manifest from the circulars/
notifications issued from time to time including the timeline for
submitting the returns. [Para 38][857-C-F]
9. Significantly, the registered person is not denied of the
opportunity to rectify omission or incorrect particulars, which he
could do in the return to be furnished for the month or quarter in
which such omission or incorrect particulars are noticed. Thus,
it is not a case of denial of availment of ITC as such. If at all, it is
only a postponement of availment of ITC. The ITC amount
remains intact in the electronic credit ledger, which can be availed
in the subsequent returns including the next financial year. It is a
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different matter that despite the availability of funds in the
electronic credit ledger, the registered person opts to discharge
OTL by paying cash. That is a matter of option exercised by the
registered person on which the tax authorities have no control,
whatsoever, nor they have any role to play in that regard. Further,
there is no express provision permitting swapping of entries
effected in the electronic cash ledger vis-a-vis the electronic credit
ledger or vice versa. [Para 47][861-E-G]
10. A priori, despite such an express mechanism provided
by Section 39(9) read with Rule 61, it was not open to the High
Court to proceed on the assumption that the only remedy that
can enable the assessee to enjoy the benefit of the seamless
utilization of the input tax credit 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. There would be complete uncertainty and no finality
could ever be attached to the self-assessment return filed
electronically. We agree with the submission of the appellant that
any indulgence shown contrary to the statutory mandate would
not only be an illegality but in reality, would simply lead to chaotic
situation and collapse of tax administration of Union, States and
Union Territories. Resultantly, assessee cannot be permitted to
unilaterally carry out rectification of his returns submitted
electronically in Form GSTR-3B, which inevitably would affect
the obligations and liabilities of other stakeholders, because
of the cascading effect in their electronic records. [Para 48]
[861-G-H; 862-A-C]
11. The matching and correction process happens on its
own as per the mechanism specified in Sections 37 and 38, after
which Form GSTR-3 is generated for the purposes of submission
of returns; and once it is submitted, any changes thereto may
have cascading effect. Therefore, the law permits rectification of
errors and omissions only at the initial stages of Forms GSTR-1
and GSTR-3, but in the specified manner. It is a different
dispensation provided than the one in pre-GST period, which did
not have the provision of auto-populated records and entries.
[Para 49][862-D-E]
UNION OF INDIA v. BHARTI AIRTEL LTD. & ORS.
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12. Suffice it to conclude that the challenge to the impugned
Circular No. 26/26/2017-GST dated 29.12.2017, is unsustainable
for the reasons noted hitherto. This Court holds that stipulations
in the stated Circular including in paragraph 4 thereof, are
consistent with the provisions of the 2017 Acts and the Rules
framed thereunder. Having said that, it must follow that there is
no necessity of reading down paragraph 4 of the impugned Circular
as has been done by the High Court vide impugned judgment. In
any case, the direction issued by the High Court being in the
nature of issuing writ of mandamus to allow the writ petitioner to
rectify Form GSTR-3B for the period - July to September 2017,
in the teeth of express statutory dispensation, cannot be
sustained. [Para 50][862-E-G]
MRF Ltd., Kottayam vs. Asstt. Commissioner
(Assessment), Sales Tax & Ors (2006) 8 SCC 702:
[2006] 6 Suppl. SCR 417 - referred to.
AAP & Co., Chartered Accountants through Authorized
Partner vs. Union of India & Ors. 2019-TIOL-1422HC-AHM-GST; Panduranga Stone Crushers vs. Union
of India & Ors. 2019-TIOL-1975-HC-AP-GST; Saji
S. Proprietor, Adithya and Ambadi Traders & Anr. vs.
The Commissioner, State GST Department & Anr. dated
12.11.2018 in W.P.(C) No. 35868/2018; Adfert
Technologies Pvt. Ltd. vs. Union of India & Ors. 2019TIOL-2519-HC-P&H-GST; Siddharth Enterprises vs.
The Nodal Officer 2019-TIOL-2068-HC-AHM-GST;
Krish Authomotors Pvt. Ltd. vs. Union of India & Ors.
2019-TIOL-2153-HC-DEL-GST; Blue Bird Pure Pvt.
Ltd. vs. Union of India & Ors. 2019 SCC OnLine Del
9250; Lease Plan India Private Limited vs. Government
of National Capital Territory decided on 13.9.2019 in
W.P.(C) No. 3309/2019 - referred to.
Case Law Reference
[2006] 6 Suppl. SCR 417
referred to
Para 44
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CIVIL APPELLATE JURISDICTION: Civil Appeal No.6520 of
2021.
From the Judgment and Order dated 05.05.2020 of the High Court
of Delhi at New Delhi in Writ Petition (Civil) No. 6345 of 2018.
N. Venkataraman, SG, Mohd. Akhil, Zoheb Hussain, Kanu
Agarwal, Mukesh Kumar Maroria, Advs. for the Appellant.
Harish N. Salve, Tarun Gulati, Sr. Advs., Ms. Anuradha Dutt,
Tushar Jarwal, Rahul Sateeja, Deepak Thackur, Anurag Soan, Sparsh
Bhargava, Ms. B. Vijayalakshmi Menon, Advs. for the Respondents.
The Judgment of the Court was delivered by
A. M. KHANWILKAR, J.
1. This appeal emanates from the judgment and order dated
05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345 of
2018, whereby the High Court allowed the writ petition filed by respondent
No.1 herein and read down paragraph 4 of the Circular No. 26/26/2017GST dated 29.12.20171 issued by the Commissioner (GST), Government
of India, Ministry of Finance, Department of Revenue, Central Board of
Excise and Customs, GST Policy Wing2, to the extent it restricted the
rectification of Form GSTR-3B in respect of the period in which the
error had occurred. The High Court also allowed respondent No.1 to
rectify Form GSTR-3B for the period in which error had occurred, i.e.,
from July to September 2017. Further, the High Court directed the
appellant that on filing of the rectified Form GSTR-3B, they shall, within
a period of two weeks, verify the claim set forth by respondent No.1
and give effect to the same once verified.
2. This lis is aftermath of enacting the Central Goods and Services
Tax Act, 20173, which came into force with effect from 01.07.2017.
Vide Notification No.10/2017 dated 01.07.2017, Rules 59, 60 and 61 of
the Central Goods and Services Tax Rules, 20174 were brought into
force along with Forms GSTR-1, GSTR-2, GSTR-2A, GSTR-3 and
GSTR-3B.
1 for short, "impugned Circular"
2 for short, "Commissioner (GST)"
3 for short, "2017 Act"
4 for short, "2017 Rules"
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3. In the context of the matter in issue, it may be apposite to take
note of the Notification No.17/2017-Central Tax dated 27.07.2017 issued
for amending Rule 61 by altering the wording of Rule 61(5) and
introducing Rule 61(6). Rule 61(5), as it stood earlier when it came into
force, read thus:
"(5) Where the time limit for furnishing of details in FORM GSTR1 under section 37 and in FORM GSTR-2 under section 38 has
been extended and the circumstances so warrant, return in FORM
GSTR-3B, in lieu of FORM GSTR-3, may be furnished in such
manner and subject to such conditions as may be notified by the
Commissioner"
4. This provision was not only substituted, but sub-Rule (6) was
also inserted in Rule 61 by the said amendment vide Notification No.17/
2017-Central Tax. The amended provision reads thus:
"Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Notification No. 17/2017 - Central Tax
New Delhi, the 27th July, 2017
G.S.R. ( )E.:- In exercise of the powers conferred by section 164
of the Central Goods and Services Tax Act, 2017 (12 of 2017),
the Central Government hereby makes the following rules further
to amend the Central Goods and Services Tax Rules, 2017,
namely:-
(1) .....
.....
2. In the Central Goods and Services Tax Rules, 2017,
.....
(v) in rule 61, with effect from 1st July, 2017, for sub-rule (5), the
following sub-rules shall be substituted, namely:-
"(5) Where the time limit for furnishing of details in FORM
GSTR-1 under section 37 and in FORM GSTR-2 under section
38 has been extended and the circumstances so warrant, the
Commissioner may, by notification, specify that return shall be
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furnished in FORM GSTR-3B electronically through the
common portal, either directly or through a Facilitation Centre
notified by the Commissioner.
(6) Where a return in FORM GSTR-3B has been furnished,
after the due date for furnishing of details in FORM GSTR2-
(a) Part A of the return in FORM GSTR-3 shall be electronically
generated on the basis of information furnished through FORM
GSTR-1, FORM GSTR-2 and based on other liabilities of
preceding tax periods and PART B of the said return shall be
electronically generated on the basis of the return in FORM
GSTR-3B furnished in respect of the tax period;
(b) the registered person shall modify Part B of the return in
FORM GSTR-3 based on the discrepancies, if any, between
the return in FORM GSTR-3B and the return in FORM GSTR3 and discharge his tax and other liabilities, if any;
(c) where the amount of input tax credit in FORM GSTR-3
exceeds the amount of input tax credit in terms of FORM
GSTR-3B, the additional amount shall be credited to the
electronic credit ledger of the registered person.";
....."
5. This was followed by Notification No.18/2017-Central Tax dated
08.08.2017, whereby time to file Form GSTR-1 for the months of July
and August 2017 was extended to 05.09.2017 and 20.09.2017
respectively. On the same day, in exercise of the powers conferred by
Rule 61(5) of the stated Rules, the Central Government issued Notification
No.21/2017-Central Tax specifying that the return for the months of
July and August 2017 shall be furnished in Form GSTR-3B electronically
through the common portal before the dates as specified in the
corresponding entry in column (3) of the table given therein. To wit, the
date for filing of Form GSTR-3B for the month of July 2017 was notified
as 20.08.2017 and that for the month of August 2017 was notified as
20.09.2017.
6. The Under Secretary to the Government of India issued another
Notification bearing No.23/2017-Central Tax dated 17.08.2017 to extend
the time for filing Form GSTR-3B for the month of July 2017 for persons
opting to file Form GST TRAN-1 on or before 20.08.2017 till 28.08.2017,
UNION OF INDIA v. BHARTI AIRTEL LTD. & ORS.
[A. M. KHANWILKAR, J.]
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subject to fulfilment of certain conditions like depositing of tax payable
under the Act and payment of interest, if any. Respondent No.1 filed its
return in Form GSTR-3B for the month of July 2017 on 31.08.2017.
7. The Commissioner (GST) issued another Circular No.7/7/2017GST dated 01.09.2017relating to system-based reconciliation of
information furnished in Forms GSTR-1, GSTR-2 and GSTR-3B and
the mechanism for correction of erroneous details furnished in Form
GSTR-3B.
8. On the representations received from the business community,
the Under Secretary to the Government of India issued Notification
No.35/2017-Central Tax dated 15.09.2017 in exercise of the powers
conferred by Section 168 of the 2017 Act read with Rule 61(5) of the
2017 Rules and other enabling provisions, on the recommendations of
the Goods and Services Tax Council5, specifying the dates for filing of
return for the concerned month as per the table given therein, in Form
GSTR-3B electronically, through the common portal on or before the
last date specified in the corresponding entry in column (3) of the said
table. The last date for the concerned English calendar month was
specified as 20th day of the succeeding English calendar month for the
period between August and December 2017. Respondent No.1 filed its
return in Form GSTR-3B on 20.09.2017 for the month of August 2017
and on 16.10.2017 for the month of September 2017.
9. The Under Secretary to the Government once again issued
Notification No.56/2017-Central Tax dated 15.11.2017, specifying the
timeline for filing of return in Form GSTR-3B for the month of January,
February and March 2018 as 20th February, 20th March and 20th April,
2018 respectively.
10. The Commissioner (GST) then issued the impugned Circular
on the subject of filing of returns under GST, clarifying certain issues
considered by the Central Board of Indirect Taxes and Customs6 to
usher in uniformity in implementation across field formations. By this
Circular, the earlier Circular issued on 01.09.2017 was kept in abeyance
until the system-based reconciliation prescribed under that Circular was
to be operationalized consequent to issue of relevant notification. Subparagraphs 3.1 and 3.2 of paragraph 3 of this Circular dealing with
amendment/corrections/rectification of errors, provided as follows;
5 for short, "the Council"
6 for short, "the Board"
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"3. Amendment / corrections / rectification of errors:
3.1 Various representations have been received wherein registered
persons have requested for clarification on the procedure for
rectification of errors made while filing their FORM GSTR-3B.
In this regard, Circular No. 7/7/2017-GST dated 1st September
2017 was issued which clarified that errors committed while filing
FORM GSTR - 3B may be rectified while filing FORM GSTR-1
and FORM GSTR-2 of the same month. Further, in the said circular,
it was clarified that the system will automatically reconcile the
data submitted in FORM GSTR-3B with FORM GSTR-1 and
FORM GSTR-2, and the variations if any will either be offset
against output tax liability or added to the output tax liability of the
subsequent months of the registered person.
3.2 Since, the GST Council has decided that the time period of
filing of FORM GSTR-2 and FORM GSTR -3 for the month of
July 2017 to March 2018 would be worked out by a Committee of
officers, the system based reconciliation prescribed under Circular
No. 7/7/2017-GST dated 1st September 2017 can only be
operationalized after the relevant notification is issued. The said
circular is therefore kept in abeyance till such time."
(emphasis supplied)
11. It may be useful to advert to paragraph 4 of the same Circular,
which reads thus:
"4. It is clarified that as return in FORM GSTR-3B do not contain
provisions for reporting of differential figures for past month(s),
the said figures may be reported on net basis alongwith the values
for current month itself in appropriate tables i.e. Table No. 3.1,
3.2, 4 and 5, as the case may be. It may be noted that while
making adjustment in the output tax liability7 or input tax credit8,
there can be no negative entries in the FORM GSTR-3B. The
amount remaining for adjustment, if any, may be adjusted
in the return(s) in FORM GSTR-3B of subsequent month(s)
and, in cases where such adjustment is not feasible, refund
may be claimed. Where adjustments have been made in FORM
7 For short, "OTL"
8 For short, "ITC"
UNION OF INDIA v. BHARTI AIRTEL LTD. & ORS.
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GSTR-3B of multiple months, corresponding adjustments in FORM
GSTR-1 should also preferably be made in the corresponding
months."
(emphasis supplied)
12. Respondent No. 1 was, however, keen on availing of the
dispensation specified in the Circular dated 01.09.2017 for the relevant
period (July to September 2017), having realized that there was surplus
amount of ITC in its ledger account (electronic credit ledger). It is the
case of respondent No.1 that it had been receiving various services
from suppliers situated throughout India including Delhi. It being a supplier
of services as well as recipient of services under the 2017 Act, was
required to file the details of outward and inward supplies for every tax
period and also of monthly return under the GST Act. In order to calculate
the OTL and the claim of ITC, during the period from July till September
2017, there was no formal or official mechanism to check the authenticity
of data so as to claim ITC for the relevant period against the transactions
effected by it with its suppliers. Whereas, an inbuilt mechanism was
guaranteed by the common electronic portal to be put in place by the
Competent Authority under the 2017 Act. However, during the initial
period, after introduction of the common electronic portal, it had several
deficiencies and was not geared up to follow the specified regime of
auto populated data - as predicated in Sections 37 and 38 of the 2017
Act.
13. Form GSTR-1 for the relevant months of July to September
2017 was required to be filed before 10.01.2018 vide Notification No.72/
2017-Central Tax dated 29.12.2017. Significantly, Form GSTR-2A
became operational only in September 2018. For that reason, as a stop
gap arrangement, the registered persons were required to submit returns
in Form GSTR-3B. It is only after Form GSTR-2A became operational
in September 2018, it is stated that respondent No. 1 realized that it had
sufficient amount in the ITC ledger account (electronic credit ledger)
during the relevant period. Further, due to non-functionality of GSTR2A, respondent No. 1 had to discharge its OTL by depositing/paying in
cash. Had Form GSTR-2A been functional, there would have been no
need for respondent No. 1 to pay the amount in cash, but could have
utilized the ITC account (electronic credit ledger) for payment of
corresponding OTL. For that reason, respondent No.1 would urge that
if it was allowed to rectify Form GSTR-3B, so as to avail ITCfor the
relevant period in terms of Circular dated 01.09.2017, the amount paid
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by it in cash towards the OTL would get credited to its electronic cash
ledger account. However, the impugned Circular dated 29.12.2017 comes
in the way of respondent No. 1 in doing so. Resultantly, respondent No.1
approached the High Court by way of writ petition under Article 226 of
the Constitution of India, filed on 31.05.2018, praying for the following
reliefs:
"PRAYER
"In light of the facts and circumstances mentioned above and in
consideration of grounds taken above, the Petitioner most humbly
prays that this Hon'ble Court may be pleased to:
(a)
issue an appropriate writ, order or direction in nature of
declaration that Rule 61(5), FORM GSTR-3B and Circular
No.26/2017 dated 29.12.2017 are ultra vires the provisions
of the CGST Act to the extent they do not provide for the
modification of information in the return of the tax period to
which such information relates and are arbitrary, in violation
of Articles 14, 19(1)(g), 265 and 300A of Constitution of
India.
(b)
issue an appropriate writ, order or directions declaring the
Notifications No.23/2017-Central Tax dated 17.08.2017, 35/
2017-Central Tax dated 15.09.2017 and 56/2017-Central
Tax dated 15.11.2017, the same as ultra vires the provisions
of Section 39(7) of the CGST Act to the extent it provides
for payment of tax finally under the CGST Act by the date
mentioned for filing FORM GSTR-3B;
(c)
issue an appropriate writ, order or direction in nature of
certiorari or any other writ, order or direction of like nature,
to call for, examine the records in relation to Circular No.26/
2017 dated 29.12.2017 and quash the same to the extent it
does not provide for the modification of the information in
the return of the tax period to which such information relates
as being arbitrary, in violation of Articles 14, 19(1)(g), 265
and 300A of Constitution of India.
(d)
issue an appropriate writ, order or direction declaring the
tax liability of the Petitioner filed under FORM GSTR-3B
is provisional and the output tax liability of the Petitioner
will only crystalize after the filing of FORM GSTR-1, 2 and
3.
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[A. M. KHANWILKAR, J.]
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(e)
issue an appropriate writ, order or directions in the nature
of mandamus or any other writ, directing the Respondents
to operationalize/start the facility of FORM GSTR-2 and
FORM GSTR-3 for period commencing from 01.07.2017;
(f)
issue an appropriate writ, order or directions in the nature
of mandamus or any other writ, directing the Respondents
to provide the Petitioner the facility for amendment and
modification of FORM GSTR-3B and grant such
consequential relief as may be necessary;
(g)
Pass any orders as this Hon'ble Court may deem fit in the
given facts and circumstances of the present case;"
14. During the pendency of the writ petition, Forms GSTR-2,
GSTR-2A and GSTR-3 came to be operationalized w.e.f. September
2018.