In a significant judgment strengthening the rights of genuine taxpayers, the Tripura High Court has ruled that Input Tax Credit (ITC) cannot be denied merely because invoices were mistakenly reported under an incorrect GST Identification Number (GSTIN), provided there is no loss of revenue to the Government. The ruling reinforces the principle that procedural lapses arising from bona fide human errors should not deprive taxpayers of substantive tax benefits under the Goods and Services Tax (GST) regime.
The decision was delivered on 27 July by a Division Bench comprising Chief Justice M.S. Ramachandra Rao and Justice Biswajit Palit in the case of M/s Ashutosh Bandyopadhay v. Union of India (W.P.(C) No. 379 of 2023).
Background of the Case
The petitioner had inadvertently uploaded GST invoices under its GST Tax Deduction at Source (GST-TDS) GSTIN instead of its regular GST registration while filing GSTR-1 and GSTR-3B returns for the period from 1 May 2019 to 5 February 2020.
Although the tax liability was correctly discharged and the invoices were duly verified by the GST department, the reporting error prevented the Input Tax Credit from being reflected in the intended GSTIN. As a result, the recipients were unable to avail the corresponding ITC despite the Government having already received the tax.
Recognising the mistake, the taxpayer approached the GST authorities seeking permission to rectify the returns. However, the request was rejected on the ground that once data had been uploaded on the GST portal, it could not be modified and that jurisdictional officers had no authority to alter returns already filed.
High Court Rejects the Department’s Stand
The Tripura High Court did not agree with the department’s rigid interpretation of the GST portal’s technical limitations. The Court observed that the dispute was not about tax evasion or wrongful ITC claims but merely about invoices being uploaded under the wrong GSTIN due to an inadvertent error.
The Bench categorically noted that there was no loss of revenue to the Government because the applicable GST had already been paid. The only issue involved was correction of the GSTIN under which the invoices were reported.
The Court held that denying rectification in such circumstances would amount to penalising a genuine taxpayer for a purely technical mistake, which is contrary to the objectives of the GST law.
Reliance on Earlier Judicial Precedents
While deciding the matter, the High Court relied upon important judgments of the Bombay High Court that recognised the need to permit correction of bona fide mistakes in GST returns.
The Court referred to the decisions in Star Engineers (I) Pvt. Ltd. v. Union of India and Aberdare Technologies Pvt. Ltd. v. Central Board of Indirect Taxes and Customs, wherein it was held that genuine human errors committed while filing GST returns should not deprive taxpayers of legitimate Input Tax Credit.
The Tripura High Court observed that the departmental argument that GST portal entries could never be modified was no longer legally sustainable in view of these judicial precedents.
Impact of Section 16(5) of the CGST Act
An important aspect of the judgment is the Court’s reference to the retrospective insertion of Section 16(5) of the Central Goods and Services Tax Act, 2017 through the Finance (No. 2) Act, 2024.
Section 16(5), made effective retrospectively from 1 July 2017, relaxes the statutory time limit for claiming Input Tax Credit relating to the financial years 2017-18, 2018-19, 2019-20 and 2020-21.
Since the petitioner’s claim pertained to the financial year 2019-20, the Court observed that it squarely fell within the benefit of the amended provision. Parliament itself had recognised the need to provide relief in deserving cases by extending the timeline for availing ITC.
This legislative amendment further strengthened the taxpayer’s case for rectification.
Directions Issued by the Court
Allowing the writ petition, the High Court directed the GST authorities to permit the petitioner to amend or rectify Forms GSTR-1 and GSTR-3B relating to the relevant period.
The Court further clarified that if rectification could not be carried out through the GST portal, the authorities must permit correction through manual means.
The entire exercise was directed to be completed within four weeks from the date of the judgment.
Significance of the Judgment
This ruling is likely to provide considerable relief to businesses that have committed genuine reporting mistakes while filing GST returns.
The judgment reiterates that procedural or technical errors should not override substantive rights, particularly where:
- Taxes have already been paid.
- There is no fraudulent intention.
- The Government has suffered no revenue loss.
- The taxpayer seeks correction of a bona fide mistake.
The decision also sends a clear message that technological limitations of the GST portal cannot become a ground for denying lawful tax benefits where the law itself permits rectification.
Conclusion
The Tripura High Court has once again emphasised that the GST framework should facilitate compliance rather than punish honest taxpayers for inadvertent errors. By directing the authorities to permit rectification of returns, the Court has reinforced the principle that Input Tax Credit is a valuable statutory right and cannot be denied merely because of a genuine GSTIN reporting mistake when no revenue loss is involved.
The judgment is expected to serve as an important precedent for taxpayers facing similar issues relating to incorrect GSTIN reporting, accidental return filing errors, and denial of ITC despite full payment of tax. It also reflects the evolving judicial approach of balancing procedural compliance with substantive justice, ensuring that genuine businesses are not deprived of legitimate tax credits because of minor clerical or technical mistakes.