M/S Lucky Building Material vs. State Of Bihar Through The Commissioner State Tax

Held

The Court held that the petitioner rectified the error in GSTR-1 for the financial year 2019-20 by filing the corrected return in June 2020, which was before filing the annual return for FY 2019-20. The Court noted that Form GSTR-1A was introduced later, effective from 10.07.2024, and was not available to the petitioner at the time of rectification. The Court found that the adjudicating authority had not given due regard to the annual return filed by the petitioner within the stipulated time. The Court reasoned that Section 37(3) allows rectification of errors or omissions, and the proviso specifies the time limit for such rectification, which the petitioner appears to have complied with by filing the annual return. The Court concluded that the tax liability had been discharged by the petitioner. Therefore, the orders of the adjudicating authority and the appellate authority were set aside. The matter was remanded back to the adjudicating authority for passing a fresh order after considering the annual return and providing the petitioner with a proper notice and an opportunity for a personal hearing within three months.

Facts

The petitioner, M/s Lucky Building Material, a proprietary concern, filed a writ application challenging an order dated 11.02.2025 by the adjudicating authority and an appellate order dated 11.08.2025 for the tax period 2020-21. The dispute arose from the petitioner inadvertently showing Business-to-Business (B2B) transactions in the Business-to-Consumer (B2C) column of its GSTR-1 return for the financial year 2019-20. The petitioner claims to have rectified this error in June 2020 by filing the GSTR-1 for the financial year 2020-21, correctly reflecting the B2B invoices with a total tax value of Rs. 4,64,480.64. The petitioner also filed its annual return (GSTR-9) for 2019-20, paying the corrected tax liability. The authorities, however, did not give due regard to the annual return and the rectification.

Key Issues

1. Whether the rectification of B2B transactions erroneously shown as B2C in GSTR-1 for FY 2019-20, made in June 2020 (in the next financial year) before filing the annual return for FY 2019-20, is valid under Section 37(3) and Rule 59 of the GST Act/Rules? Petitioner's arguments: The petitioner argued that the error was rectified within the prescribed time limits under Section 37(3) and Rule 59 by filing the corrected GSTR-1 in June 2020 and subsequently paying the tax liability through the annual return (GSTR-9) for FY 2019-20. They contended that the authorities failed to appreciate the annual return, which would have settled the matter, and that no tax liability remained as the tax was already paid after rectification. Revenue's arguments: The State argued that the rectification for FY 2019-20 was done in the next financial year (2020-21), and the payment of tax was not reflected in GSTR-3B. They further contended that the authorities were not required to go into the GSTR-9 as the petitioner admitted to paying lower tax through GSTR-3B. The State also pointed out that showing the B2B supplies in GSTR-1 for 2020-21 resulted in duplication and inflated tax liability for that period, which was not discharged by the petitioner.