BHARTI AIRTEL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Bharti Airtel Limited (hereinafter referred to as 'Petitioner') has preferred the present petition under Article 226 of the Constitution of India impugning inter alia, Rule 61 (5) of the GST Rules, Form GSTR- 3B and Circular No. 26/26/2017-GST (hereinafter referred to as the 'impugned circular') dated 29.12.2017 as ultra vires the provisions of Central Goods and Services Tax Act, 2017 (CGST Act) and contrary to Articles 14, 19 and 265 of the Constitution of India. The challenge to the aforenoted provisions is principally for the reason that Petitioner is being prevented from correcting its monthly GST returns, and consequently seeking refund of the excess taxes paid.

(2.) To fully comprehend the tax provisions and circulars that are coming in the way of the Petitioner to correct the errors it has noticed, we would have to advert to the facts of the case and also reflect upon the statutory scheme of the GST filings and also take note of the circumstances that led to this situation. To begin with, let us briefly note the facts - Petitioner is engaged in the business of providing telecommunication services in India, including Delhi, by virtue of license granted by the Department of Telecommunication, Government of India. With the implementation of GST, it took registration in each and every State and Union Territory and now has 50 registrations under GST laws for making payment of CGST, SGST and IGST. Since the compliance regime under the GST laws is significantly different and the statutory provisions provide for a complete electronic model of compliances, Petitioner remoulded its system from the centralized registration under the erstwhile service tax regime, to multiple registrations under GST in order to bring it in conformity with the new laws. This included introduction of the technical changes for enabling filing of the statutory Forms GSTR-1, 2 and 3. However, while putting the new law into practice, Government could not operationalise Forms GSTR-2 and 3 and, as a result a summary scheme of filing Form GSTR- 3B was introduced. The petitioner states that this half-baked step of the Respondents is the root cause in the failure of the system in detecting the errors which in the course of time created the situation wherein the petitioner finds itself.

(3.) The Petitioner recounts that during the initial phase of the GST regime it was facing issues on the electronic system i.e. Goods and Services Tax Network (GSTN) portal created by the Government as the same was not equipped to handle the transition from the erstwhile regime to GST. In this transition phase, several issues cropped up which had a significant impact on tax paid, the output liability, and the ITC of the Petitioner and led to occurrence of several inadvertent errors. To illustrate a few, invoices were accidently missed while filing Form GSTR-3B; credit notes pertaining to the invoices issued under the erstwhile regime were overlooked and, as a result, the output tax liability was over-reported; certain transactions like stock transfer from one place of business to another under the same GST Registration was reported as supply; in few instances, due to inadvertent error, NIL Form GSTR-3B were filed, though actually there was output tax liability. To sum it up, the paramount grievance of the Petitioner is that during the period from July, 2017 to September, 2017 (hereinafter referred to as 'the relevant period'), the Petitioner in its monthly GSTR- 3B recorded the ITC based on its estimate. As a result, when the Petitioner had to discharge the GST liability for the relevant period, the details of ITC available were not known and the Petitioner was compelled to discharge its tax liability in cash, although, actually ITC was available with it but was not reflected in the system on account of lack of data. The exact ITC available for the relevant period was discovered only later in the month October 2018, when the Government operationalized Form GSTR-2A for the past periods. Thereupon, precise details were computed and Petitioner realized that for the relevant period ITC had been under reported. The Petitioner alleges that there has been excess payment of taxes, by way of cash, to the tune of approximately Rs. 923 crores. This was occasioned to a great degree due to non-operationalization of Forms GSTR-2A, GSTR-2 and GSTR-3 and the system related checks which could have forewarned the petitioner about the mistake. Moreover, since there were no checks on the Form GSTR-3B which was manually filled up by the Petitioner, the excess payment of tax went unnoticed. Petitioner now desires to correct its returns, but is being prevented from doing so, as there is no enabling statutory procedure implemented by the Government.