*Union of India Vs Bharti Airtel & Ors*
*Date-28th October 2021*
*Forum-Supreme Court of India*
*Sub-Whether a supplier is entitled to take credit for inputs by correcting GSTR 3B beyond the period as prescribed by the rules as laid down. *

The Apex Court today in the case of Bharti Airtel allowed the appeal of Union of India whereby their appeal against *reading down of the paragraph 4 of the Circular dated 29th December, 2017 issued by the CBIC which had clarified that “The amount remaining for adjustment, if any, may be adjusted in the return(s) in FORM GSTR­3B of subsequent month(s) and, in cases where such adjustment is not feasible, refund may be claimed” was allowed.*

The Supreme Court in a blow to the assessees held the High Court 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. During the period prior to this also the writ petitioner was fulfilling its obligations and it was not dependent on auto populated figures and as such there was no reason why the claim as such was being made now. 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 pre­GST regime whilst discharging the obligation under the concerned legislation(s).

The entire edifice of the grievance of the writ petitioner (respondent No. 1) was founded on non­operability of Form GSTR­ 2A 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

While deciding the issue, the apex court also did not approve the Gujarat high court decision in AAP & Co, Chartered Accountants that GSTR 3B is a stop gap arrangement and not a return.

The Court also held Form GSTR­2A is only a facilitator for taking an informed decision while doing such self­assessment. Non­ performance or non­operability of Form GSTR­2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self­assessment in Form GSTR­3B manually on electronic platform.

The court was also prejudiced by the fact that 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 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 vis­a­vis the electronic credit ledger or vice versa.

This is an important judgement which will set the tone for litigations in this area.

Ramesh Patodia
28-10-2021