Rectification Of GST Returns Permissible Where There Is No Revenue Loss: Gujarat High Court

Earlier this month, the Gujarat High Court held that inadvertent errors in GST returns can be rectified, provided there is no loss of revenue, and directed the authorities to facilitate amendment of GSTR-01 and GSTR-3B for the initial years of GST rollout.

A Division Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi allowed the writ petition filed by an authorized dealer of TATA Motors, permitting rectification of monthly returns electronically or manually. The Bench referred to the Bombay High Court's reasoning in Star Engineers, which applied a purposive interpretation of the GST law to allow rectification of inadvertent errors in returns.

The petitioner had claimed Input Tax Credit (ITC) on invoices issued by TATA Motors. Post-sale, both parties issued debit and credit notes for sales discounts. When the notes were uploaded during return filing, the GST portal accounted only for the credit notes, creating a mismatch in ITC. This led to a liability of Rs. 10.9 crores under Form DRC-03.

The Additional Commissioner rejected the petitioner's refund application, and a show-cause notice was issued proposing reversal of ITC worth Rs. 34.26 crores and appropriation of output tax of Rs. 42.75 crores.

The petitioner explained that the mismatch arose because debit notes were not captured, but there was no actual shortfall in tax liability—the tax paid exceeded the ITC reversal amount.

The High Court observed:

“Since the petitioners are unable to rectify the returns for the years 2017-18 and 2018-19, and as held by various judgments of the High Courts, including the judgment of the Bombay High Court, if the respondents permit the petitioners to amend or rectify Form GSTR-1, no loss to the revenue would be caused.”

The Bench directed the GST authorities to open the portal within 10 days to enable the petitioner to amend or rectify the monthly returns, reaffirming that technical errors cannot defeat substantive justice.

Accordingly it allowed the writ petition.

For Appellant: Advocates Uchit N Sheth