Bombay High Court Urges Tax Department To Foster Assessee-Friendly Approach, Allowing Amendments To GSTR-1 Forms

The tax department needs to avoid unwarranted litigation and make the system more assessee-friendly, observed the Bombay High Court.

The court also stated that the tax department should permit companies to make amendments or modify their GSTR-1 forms in case of inadvertent or bonafide mistakes, provided it does not cause any loss to the public exchequer. It emphasized that the department should recognize such inadvertent and bonafide mistakes.

System has to be more assessee-friendly

“Such free play in the joint requires eminent recognition. 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,” a division bench of Justices Girish Kulkarni and Jitendra Jain said on Thursday.

The HC was hearing a petition by Star Engineers (I) Pvt Ltd, engaged in designing and manufacturing electronic components for industrial purposes. It sought permission to make necessary amendments or rectify mistakes in its Form GSTR-1 either through online or manual means.

While allowing the petition, the HC noted that the errors were inadvertent and bonafide, with no illegal gain being derived.

The plea

The plea challenged a September 27, 2023 communication issued by the Deputy Commissioner, State Tax, refusing permission to modify/amend its Form GSTR-1 for the 2021-2022 financial year, citing it was time-barred. It sought to make an amendment, claiming that it had mentioned the wrong GSTIN of the companies to whom it had delivered its products.

The bench stated that GST returns with incorrect particulars need not become sacrosanct, as this would have a cascading effect. “This is necessarily required to be borne in mind when considering cases of inadvertent human errors creeping into the filing of GST returns,” the court added.

The GST regime is largely based on the electronic domain, and hence there are likely to be inadvertent and bonafide human errors as assesses adapt to the new regime, the court said. It added that for a system to be understood and operate perfectly, it takes some time, and the provisions of law should be alive to such considerations.