Supreme Court: In a major setback to Bharti Airtel Ltd., the Division Bench comprising of A.M. Khanwilkar* and Dinesh Maheshwari, JJ., overturned the decision of the Delhi High Court and barred the company from rectifying its form GSTR-3B to claim GST refund of approx  Rs.923 crores. Finding no merit in the grievance raised by the company, the Bench remarked,

The factum of non-operability of Form GSTR-2A, is flimsy plea. Indeed, if the stated form was operational, the same would have come handy to the respondent for self-assessment regarding eligibility of ITC, but it is a feeble excuse given by the respondent to assail the impugned Circular.

Findings of the High Court

The High Court of Delhi, by the impugned judgment had read down paragraph 4 of the Circular No. 26/26/2017GST dated 29-12-2017 issued by the Commissioner (GST), Central Board of Excise and Customs, 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 the company-respondent to rectify Form GSTR-3B for the period in which error had occurred, i.e., from July to September 2017.

Grievance of the Respondent

The respondent contended that due to repeated technical glitches in the electronic common portal introduced by the Department, during the transition phase from the erstwhile regime to the GST regime, he had submitted its monthly Form GSTR-3B based on estimates, for the relevant period of July to September 2017. The respondent submitted that there had been an excess payment of Rs.923 crores in cash for discharging OTL (Outward Tax Liability). In other words, despite the fact that a bona fide error had occurred for reasons beyond the control of respondent, yet he was unable to correct the mistake in Form GSTR3B for the relevant period due to the restriction imposed by paragraph 4 of the Circular dated 29-12-2017.

Factual Analysis

The Bench observed that the Circular in question was issued 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 GSTR3B and other related queries to ensure uniformity in implementation across field formations. Therefore, the said Circular was not the direction issued by the Commissioner (GST) as such, but it was notifying the decision(s) of the Board taken in exercise of its powers conferred under Section 168(1) of the 2017 Act.

Rejecting the contention of the respondent that due to the failure of the Department he had make payment in cash which had resulted in payment of double tax, thereby offered unfair advantage to the tax authorities, the Bench stated that the High Court had failed to enquire into the cardinal question as to whether the respondent 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. Answering the aforesaid question in negative, the Bench stated that, the respondent 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. The Bench added,

“The common portal is only a facilitator to feed or retrieve such information and need not be the primary source for doing self-assessment. 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.”

Whether the Impugned Circular was inconsistent with Statutory Mandate?

While ascertaining the legality of the impugned circular, the Bench observed the express provision in the form of Section 39(9) clearly posits that omission or incorrect particulars furnished in the return in Form GSTR3B 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 had been restated in the impugned Circular. Therefore, it was held that the impugned circular was not contrary to the statutory dispensation specified in Section 39(9) of the Act and the High Court had noted that there was no such provision in the Act, which restricts such rectification of the return in the period in which the error is noticed.

Findings of the Court

The aspect of statutory obligation fastened upon the registered person to maintain books of accounts and record within the meaning of Chapter VII of the 2017 Rules, are primary documents and source material on the basis of which self-assessment is done by the registered person including about his eligibility and entitlement to get ITC (Input Tax Credit) and of OTL. Form GSTR2A is only a facilitator for taking an informed decision while doing such self-assessment.

Noticing that during the pre-GST regime, the respondent (being registered person/assessee) had been maintaining such books of accounts and records and submitting returns on its own, the Bench stated that non-operability of Form GSTR2A or for that matter, other forms, would be of no avail for the respondent 1 because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self-assessment in Form GSTR3B manually on electronic platform. Further, the Bench opined,

“Payment for discharge of OTL by cash or by way of availing of ITC, is a matter of option, which having been exercised by the assessee, cannot be reversed unless the Act and the Rules permit such reversal or swapping of the entries.”

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 was not a case of denial of availment of ITC as such, rather it was only a postponement of availment of ITC as the ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year.


In the backdrop of above, the Bench held that the assessee-respondent could not be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.

Further, the challenge to the impugned Circular was declared unsustainable, and the Bench held that stipulations in the Circular including in paragraph 4 were consistent with the provisions of the Act, 2017. The appeal was allowed. The impugned judgment and order was set aside.

[Union of India v. Bharti Airtel Ltd., 2021 SCC OnLine SC 1006, decided on 28-10-2021]

Kamini Sharma, Editorial Assistant has put this report together

*Judgment by: Justice A.M. Khanwilkar

Know Thy Judge| Justice AM Khanwilkar

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