Om Traders vs. Union Of INDIA

Held

The Court held that there is no statutory provision that supports the advice given by the concerned authority to pay CGST and SGST and then claim a refund of erroneously paid IGST. The Court noted that the petitioner had made an inadvertent clerical error in filling up certain figures in GSTR-3B, which did not tally with GSTR-1. The Court found that the petitioner's request for rectification was justified. Citing the Bombay High Court's decision in Aberdare Technologies Pvt Ltd & Anr vs. Central Board of Indirect Taxes & Customs and ors, which was affirmed by the Supreme Court, the Court directed the respondents to open the portal to enable the petitioner to amend/rectify Form GSTR-1 and GSTR-3B. The Court set aside the impugned order dated 06.05.2020. The concerned authorities were directed to allow rectification of GSTR-3B on par with GSTR-1 within one month from the receipt of the order, with the petitioner submitting a manual application. Any consequent grievances were to be redressed within two months. The Court found that the petitioner had made out a case for interference with the impugned orders.

Facts

The petitioner, Om Traders, a partnership firm, inadvertently made clerical errors while filing its GSTR-3B return for April 2019. Specifically, the total taxable value and IGST amounts reported in GSTR-3B did not match the figures in its GSTR-1 return for the same period. The petitioner sought to rectify its GSTR-3B to align with GSTR-1. However, its application was rejected on May 6, 2020, by the Central Board of Indirect Taxes and Customs (CBIC), which advised the petitioner to pay the CGST and SGST liabilities and then claim a refund of the erroneously paid IGST. Subsequently, the Joint Commissioner of State Tax issued an order on August 23, 2024, demanding tax, interest, and penalty amounting to Rs. 2,49,45,852/- for April 2019, without considering the GSTR-1, GSTR-2A, and Rule 88A of the CGST Rules, which permit adjustment of IGST with CGST and SGST.

Key Issues

1. Whether the order dated 06.05.2020 passed by respondent no. 2 (CBIC), rejecting the petitioner's request for adjustment of erroneously paid IGST with CGST and SGST liabilities, and advising payment of tax again followed by a refund claim, is contrary to principles of natural justice and Article 265 of the Constitution of India? 2. Whether the order dated 23.08.2024 passed by respondent no. 6, demanding tax, interest, and penalty for April 2019, is illegal and arbitrary, given the inadvertent clerical error in GSTR-3B, the availability of ITC by way of IGST, the provisions of Rule 88A of the CGST Rules, and Circular No. 98/17/2019/GST? 3. Whether the charge of interest on the disputed tax, arising solely from a clerical error in GSTR-3B, is illegal and arbitrary, especially in light of the availability of IGST credit for adjustment against CGST and SGST liabilities under Rule 88A? Petitioner's arguments: The petitioner contended that the order dated 06.05.2020 was passed without adhering to natural justice and Article 265 of the Constitution. They argued that the demand raised by respondent no. 6 was arbitrary as it failed to consider the GSTR-1, GSTR-2A, and Rule 88A, which allows adjustment of IGST with CGST and SGST, as elaborated in Circular No. 98/17/2019/GST. The petitioner relied on the Bombay High Court's decision in Aberdare Technologies Pvt Ltd & Anr vs. Central Board of Indirect Taxes & Customs and ors, which was upheld by the Supreme Court, for the entitlement to similar relief. Respondent's arguments: The respondent argued that the petitioner failed to follow the advice given by the Assistant Commissioner of CGST and CX Ranchi Zone on 06.05.2020, which suggested paying CGST and SGST and then claiming a refund. The respondent also relied on Section 49(5) of the CGST Act and urged for the dismissal of the writ petition.