Allow rectification of inadvertent, bonafide errors in GSTR forms, HC tells tax dept

Mumbai,:The Bombay High Court on Thursday said the tax department should permit companies to modify or make changes to their GSTR-1 forms in case of inadvertent or bonafide mistakes and when the same does not cause any loss to the public exchequer. A division bench of Justices GS Kulkarni and Jitendra Jain in its order said the tax department ought to recognize such inadvertent and bonafide mistakes especially when it is aware that there is no loss of revenue to the government.

“The department needs to avoid unwarranted litigation on such issues and make the system more assessee friendly. Such an approach would also foster the interest of revenue in the collection of taxes,” the court said.

The court permitted the petitioner company, Star Engineers (I) Pvt Ltd, which is engaged in designing and manufacturing electronic components for industrial purposes, to make necessary amendments or rectify the mistakes in its Form GSTR-1 either through online or manual means.

The bench in its order noted the errors were inadvertent and bonafide and there was not an iota of any illegal gain being derived.

The company challenged a communication dated September 27, 2023 issued by the Deputy Commissioner, State Tax, refusing it permission to modify/amend its Form GSTR-1 for financial year 2021-2022, saying it was time barred.

As per the plea, the petitioner had mentioned wrong GSTIN of the companies to whom it had delivered its products. The bench in its order noted when there is a bonafide and inadvertent error in furnishing any particulars in filing of returns, accompanied with the fact that there is no loss of revenue whatsoever in permitting the correction of mistake then the same should be allowed. It added that GST returns having incorrect particulars need not become sacrosanct as then this would have a cascading effect.

“This is necessarily required to be borne in mind when considering the cases of inadvertent human errors creeping into the filing of GST returns,” the court said.

The court noted the GST regime is largely based in the electronic domain and, hence, there are likely to be inadvertent and bonafide human errors in the assessees adopting themselves to the new regime.

“The diversity in which the traders and the assessees in our country function, with the limited expertise and resources they would have, cannot be overlooked in the expectation the present regime would have in the traders / assessees complying with the provisions of GST laws,” the bench said in its order.

For a system to be understood and for it to operate perfectly takes some time and the provisions of law are required to be alive to such considerations, it added.