Bombay HC urges tax dept to permit rectification of errors in GSTR forms

Bombay High Court/ File Photo

The tax department should permit businesses to correct accidental or legitimate errors in their GSTR-1 forms, the Bombay High Court stressed on Thursday, especially if the corrections do not incur any costs to the public coffers, stated a report in PTI.

According to the report, the tax department was instructed by the court to recognise and accommodate such unintentional errors, particularly in cases where there is no apparent loss of government revenue, in an order authored by a division bench made up of Justices GS Kulkarni and Jitendra Jain.

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By advocating for a more taxpayer-friendly system and highlighting the need for the tax department to abstain from needless litigation on these issues, the court's order promoted the government's interest in tax collection without obstructing legitimate rectifications, the report added.

"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 was quoted as saying in the PTI report.

In a particular case, the court allowed the petitioner company Star Engineers (I) Pvt Ltd, which designs and manufactures electronic components for industrial use, to correct errors in its GSTR-1 form using either manual or online methods.

The court noted that the petitioner's mistakes were sincere and unintentional, and there was no indication that any illegal gain was being pursued. The company argued that the September 27, 2023, communication from the Deputy Commissioner of State Tax was invalid because it was sent too late and denied their request to amend or modify their GSTR-1 for the 2021-2022 fiscal year.

The court stressed the need for flexibility, taking into account the adjustment period for traders and assessing adapting to the GST regime while acknowledging the inevitable occurrence of unintentional human errors in the electronic filing of GST returns.

"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 emphasised that to avoid potential cascading effects, it is crucial to allow rectifications for inadvertent errors. The court highlighted the difficulties faced by traders and assessees in complying with GST laws due to limited expertise and resources.

"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.

The court emphasised that to facilitate corrections without putting the exchequer at financial risk, the legal provisions must take into account the practical difficulties and learning curves that people encounter when adjusting to the GST regime.

With PTI inputs