2021 INSC 0687
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
       CIVIL APPEAL NO.         OF 2021         
(ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020)
UNION OF INDIA                                             APPELLANT(S)
VERSUS
BHARTI AIRTEL LTD. & ORS.                         RESPONDENT(S)
J U D G M E N T
A.M. KHANWILKAR, J.
1. This   appeal   emanates   from   the   judgment   and   order   dated
05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345
of 2018, whereby the High Court allowed the writ petition filed by
respondent   No.1   herein   and   read   down   paragraph   4   of   the
Circular   No.   26/26/2017­GST   dated   29.12.2017 1
  issued   by   the
Commissioner   (GST),   Government   of   India,   Ministry   of   Finance,
Department   of   Revenue,   Central   Board   of   Excise   and   Customs,
GST   Policy   Wing 2
,   to   the   extent   it   restricted   the   rectification   of
Form   GSTR­3B   in   respect   of   the   period   in   which   the   error   had
occurred.   The High Court also allowed respondent No.1 to rectify
1  f or short, “impugned Circular”
2   for short, “Commissioner (GST)”

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Form   GSTR­3B   for   the   period   in   which   error   had   occurred,   i.e.,
from   July   to   September   2017.     Further,   the   High   Court   directed
the   appellant   that   on   filing   of   the   rectified   Form   GSTR­3B,   they
shall,   within   a   period   of   two   weeks,   verify   the   claim   set   forth   by
respondent No.1 and give effect to the same once verified.
2. This   lis   is   aftermath   of   enacting   the   Central   Goods   and
Services   Tax   Act,   2017 3
,   which   came   into   force   with   effect   from
01.07.2017.     Vide   Notification   No.10/2017   dated   01.07.2017,
Rules 59, 60 and 61 of the Central Goods and Services Tax Rules,
2017 4
  were brought into force along with Forms GSTR­1, GSTR­2,
GSTR­2A, GSTR­3 and GSTR­3B.
3. In   the   context   of   the   matter   in   issue,   it   may   be   apposite   to
take   note   of   the   Notification   No.17/2017­Central   Tax   dated
27.07.2017   issued   for   amending   Rule   61   by   altering   the   wording
of   Rule   61(5)   and   introducing   Rule   61(6).     Rule   61(5),   as   it   stood
earlier when it came into force, read thus:
“(5)   Where   the   time   limit   for   furnishing   of   details   in
FORM GSTR­1 under section 37 and in FORM GSTR­2
under   section   38   has   been   extended   and   the
circumstances   so   warrant,   return  in  FORM   GSTR­3B,
in   lieu   of   FORM   GSTR­3,   may   be   furnished   in   such
manner   and   subject   to   such   conditions   as   may   be
notified by the Commissioner”
3  f or short, “2017 Act”
4  f or short, “2017 Rules”

3
4. This provision was not only substituted, but sub­Rule (6) was
also   inserted  in   Rule   61   by   the  said  amendment   vide  Notification
No.17/2017­Central Tax.  The amended provision reads thus:
“Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Notification No. 17/2017 – Central Tax
New Delhi, the 27th July, 2017
G.S.R.   (   )E.:­   In   exercise   of   the   powers   conferred   by
section 164 of the Central Goods and Services Tax Act,
2017   (12   of   2017),   the   Central   Government   hereby
makes the following rules further to amend the Central
Goods and Services Tax Rules, 2017, namely:­
(1) …..
…..
2. In   the   Central   Goods   and   Services   Tax   Rules,
2017,
…..
(v)   in   rule   61,   with   effect   from   1st   July,   2017,   for
sub­rule   (5),   the   following   sub­rules   shall   be   substi ­
tuted, namely:­ 
“(5) Where the time limit for furnishing of details
in FORM GSTR­1 under section 37 and in FORM
GSTR­2   under   section   38   has   been   extended
and the circumstances so warrant, the Commis ­
sioner   may,   by   notification,   specify   that   return
shall   be   furnished   in   FORM   GSTR­3B   electroni ­
cally through the common portal, either directly
or   through   a   Facilitation   Centre   notified   by   the
Commissioner.
(6) Where a return in FORM GSTR­3B  has been
furnished,   after   the   due   date   for   furnishing   of
details in FORM GSTR­2—
(a)   Part   A   of   the   return   in   FORM   GSTR­3   shall
be electronically generated on the basis of infor ­
mation furnished through FORM GSTR­1, FORM
GSTR­2 and based on other liabilities of preced ­
ing   tax   periods   and   PART   B   of   the   said   return

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shall   be   electronically   generated   on   the   basis   of
the   return   in   FORM   GSTR­3B   furnished   in   re ­
spect of the tax period;
(b)   the   registered   person   shall   modify   Part   B   of
the   return   in   FORM   GSTR­3   based   on   the   dis ­
crepancies,   if   any,   between   the   return   in   FORM
GSTR­3B   and   the   return   in   FORM   GSTR­3   and
discharge his tax and other liabilities, if any;
(c)   where   the   amount   of   input   tax   credit   in
FORM  GSTR­3 exceeds  the  amount  of input  tax
credit   in   terms   of   FORM   GSTR­3B,   the   addi ­
tional amount shall be credited to the electronic
credit ledger of the registered person.”;
…..”
5. This   was   followed   by   Notification   No.18/2017­Central   Tax
dated   08.08.2017,   whereby   time   to   file   Form   GSTR­1   for   the
months of July and August 2017 was extended to 05.09.2017 and
20.09.2017   respectively.     On   the   same   day,   in   exercise   of   the
powers   conferred   by   Rule   61(5)   of   the   stated   Rules,   the   Central
Government   issued   Notification   No.21/2017­Central   Tax
specifying that the return for the months of July and August 2017
shall   be   furnished   in   Form   GSTR­3B   electronically   through   the
common portal before the dates as specified in the corresponding
entry in column (3)   of the table given therein.   To wit, the date for
filing of Form GSTR­3B for the month of July 2017 was notified as
20.08.2017 and that for the month of August 2017 was notified as
20.09.2017.

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6. The   Under   Secretary   to   the   Government   of   India   issued
another   Notification   bearing   No.23/2017­Central   Tax   dated
17.08.2017   to   extend   the   time   for   filing   Form   GSTR­3B   for   the
month   of   July   2017   for   persons   opting   to   file   Form   GST   TRAN­1
on   or   before   20.08.2017   till   28.08.2017,   subject   to   fulfilment   of
certain conditions like depositing of tax payable under the Act and
payment   of   interest,   if   any.     Respondent   No.1   filed   its   return   in
Form GSTR­3B for the month of July 2017 on 31.08.2017.
7. The   Commissioner   (GST)   issued   another   Circular
No.7/7/2017­GST   dated   01.09.2017   relating   to   system­based
reconciliation of information furnished in Forms GSTR­1, GSTR­2
and   GSTR­3B   and   the   mechanism   for   correction   of   erroneous
details furnished in Form GSTR­3B.
8. On   the   representations   received   from   the   business
community,   the   Under   Secretary   to   the   Government   of   India
issued   Notification   No.35/2017­Central   Tax   dated   15.09.2017   in
exercise   of   the   powers   conferred   by   Section   168   of   the   2017   Act
read   with   Rule   61(5)   of   the   2017   Rules   and   other   enabling
provisions,   on   the   recommendations   of   the   Goods   and   Services
Tax   Council 5
,   specifying   the   dates   for   filing   of   return   for   the
5  f or short, “the Council”

6
concerned month as per the table given therein, in Form GSTR­3B
electronically,   through   the   common   portal   on   or   before   the   last
date specified in the corresponding entry in column (3) of the said
table.     The   last   date   for   the   concerned   English   calendar   month
was   specified   as   20 th
  day   of   the   succeeding   English   calendar
month   for   the   period   between   August   and   December   2017.
Respondent No.1 filed its return in Form GSTR­3B on 20.09.2017
for the month of August 2017 and on 16.10.2017 for the month of
September 2017.
9. The   Under   Secretary   to   the   Government   once   again   issued
Notification No.56/2017­Central Tax dated 15.11.2017, specifying
the timeline for filing of return in Form GSTR­3B for the month of
January, February  and  March 2018 as 20 th
  February, 20 th
  March
and 20 th
 April, 2018 respectively. 
10. The Commissioner  (GST) then  issued the impugned Circular
on   the   subject   of   filing   of   returns   under   GST,   clarifying   certain
issues   considered   by   the   Central   Board   of   Indirect   Taxes   and
Customs 6
  to   usher   in   uniformity   in   implementation   across   field
formations.     By   this   Circular,   the   earlier   Circular   issued   on
01.09.2017   was   kept   in   abeyance   until   the   system­based
6  f or short, “the Board”

7
reconciliation   prescribed   under   that   Circular   was   to   be
operationalized consequent to issue of relevant notification.   Sub­
paragraphs   3.1   and   3.2   of   paragraph   3   of   this   Circular   dealing
with   amendment/corrections/rectification   of   errors,   provided   as
follows;
“ 3.   Amendment   /   corrections   /   rectification   of
errors :
3.1   Various   representations   have   been   received
wherein   registered   persons   have   requested   for
clarification on the procedure for rectification of errors
made while filing their FORM GSTR­3B. In this regard,
Circular No. 7/7/2017­GST dated 1st September 2017
was issued which clarified that errors committed while
filing   FORM   GSTR   –   3B   may   be   rectified   while   filing
FORM GSTR­1 and FORM GSTR­2 of the same month.
Further,   in   the   said   circular,   it   was   clarified   that   the
system will automatically reconcile the data submitted
in   FORM   GSTR­3B   with   FORM   GSTR­1   and   FORM
GSTR­2,   and   the   variations   if   any   will   either   be   offset
against  output tax liability  or added to the output tax
liability   of   the   subsequent   months   of   the   registered
person.
3.2   Since,   the   GST   Council   has   decided   that   the   time
period   of   filing   of   FORM   GSTR­2   and   FORM   GSTR   ­3
for   the   month   of   July   2017   to   March   2018   would   be
worked   out   by   a   Committee   of   officers,   the   system
based   reconciliation   prescribed   under   Circular   No.
7/7/2017­GST dated 1st September 2017 can only be
operationalized after the relevant notification is issued.
The   said   circular  is  therefore   kept   in   abeyance   till
such time .”
(emphasis supplied)
11. It   may   be   useful   to   advert   to   paragraph   4   of   the   same
Circular, which reads thus:
“4.  It  is  clarified  that  as return in  FORM  GSTR­3B   do
not   contain   provisions   for   reporting   of   differential
figures   for   past   month(s),   the   said   figures   may   be
reported on net basis alongwith the values for current
month   itself   in   appropriate   tables   i.e.   Table   No.   3.1,

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3.2, 4 and 5, as the case may be. It may be noted that
while making adjustment in the output tax liability 7
 or
input   tax   credit 8
,   there   can   be   no   negative   entries   in
the   FORM   GSTR­3B.   The   amount   remaining   for
adjustment, if any, may be adjusted in the return(s)
in   FORM   GSTR­3B   of   subsequent   month(s)   and,   in
cases where such adjustment is not feasible, refund
may be claimed . Where adjustments have been made
in FORM GSTR­3B  of multiple months, corresponding
adjustments   in   FORM   GSTR­1   should   also   preferably
be made in the corresponding months.”
(emphasis supplied)
12. Respondent   No.   1   was,   however,   keen   on   availing   of   the
dispensation   specified   in   the   Circular   dated   01.09.2017   for   the
relevant   period   (July   to   September   2017),   having   realized   that
there was surplus amount of ITC  in its ledger  account (electronic
credit   ledger).     It   is   the   case   of   respondent   No.1   that   it   had   been
receiving   various   services   from   suppliers   situated   throughout
India   including   Delhi.     It   being   a   supplier   of   services   as   well   as
recipient   of   services   under   the   2017   Act,   was   required   to   file   the
details   of   outward   and   inward   supplies   for   every   tax   period   and
also   of   monthly   return   under   the   GST   Act.     In   order   to   calculate
the   OTL   and   the   claim   of   ITC,   during   the   period   from   July   till
September   2017,   there   was   no   formal   or   official   mechanism   to
check  the   authenticity  of   data   so  as   to  claim  ITC   for   the   relevant
period   against   the   transactions   effected   by   it   with   its   suppliers.
7   For short, “OTL”
8   For short, “ITC”

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Whereas,   an   inbuilt   mechanism   was   guaranteed   by   the   common
electronic   portal   to   be   put   in   place   by   the   Competent   Authority
under   the   2017   Act.     However,   during   the   initial   period,   after
introduction   of   the   common   electronic   portal,   it   had   several
deficiencies and was not geared up to follow the specified regime of
auto populated data ­ as predicated in Sections 37 and  38 of the
2017 Act.  
13. Form   GSTR­1   for   the   relevant   months   of   July   to   September
2017   was   required   to   be   filed   before   10.01.2018   vide   Notification
No.72/2017­Central   Tax   dated   29.12.2017.     Significantly,   Form
GSTR­2A   became   operational   only   in   September   2018.     For   that
reason,   as   a   stop   gap   arrangement,   the   registered   persons   were
required   to   submit   returns   in   Form   GSTR­3B.     It   is   only   after
Form GSTR­2A became operational in September 2018, it is stated
that respondent No. 1 realized that it had sufficient amount in the
ITC   ledger   account   (electronic   credit   ledger)   during   the   relevant
period.  Further, due to non­functionality of GSTR­2A, respondent
No. 1 had to discharge its OTL by depositing/paying in cash.  Had
Form   GSTR­2A   been   functional,   there   would   have   been   no   need
for   respondent   No.   1   to   pay   the   amount   in   cash,   but   could   have
utilized   the   ITC   account   (electronic   credit   ledger)   for   payment   of

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corresponding OTL.   For that reason, respondent No.1 would urge
that if it was allowed to rectify  Form GSTR­3B, so as to avail ITC
for the relevant period in terms of Circular dated 01.09.2017, the
amount  paid  by  it  in  cash towards  the  OTL  would  get  credited  to
its   electronic   cash   ledger   account.     However,   the   impugned
Circular   dated   29.12.2017   comes   in  the   way  of   respondent   No.   1
in   doing   so.     Resultantly,   respondent   No.1   approached   the   High
Court by way of writ petition under Article 226 of the Constitution
of India, filed on 31.05.2018, praying for the following reliefs:
“ PRAYER
“In   light   of   the   facts   and   circumstances   mentioned
above   and   in   consideration   of   grounds   taken   above,
the   Petitioner   most   humbly   prays   that   this   Hon’ble
Court may be pleased to:
(a) issue   an   appropriate   writ,   order   or   direction   in
nature of declaration that Rule 61(5), FORM GSTR­3B
and   Circular   No.26/2017   dated   29.12.2017   are   ultra
vires the provisions of the CGST Act to the extent they
do   not   provide   for   the   modification   of   information   in
the return of the tax period to which such information
relates   and   are   arbitrary,   in   violation   of   Articles   14,
19(1)(g), 265 and 300A of Constitution of India.
(b) issue   an   appropriate   writ,   order   or   directions
declaring   the   Notifications   No.23/2017­Central   Tax
dated   17.08.2017,   35/2017­Central   Tax   dated
15.09.2017   and   56/2017­Central   Tax   dated
15.11.2017,   the   same   as   ultra   vires   the   provisions   of
Section 39(7) of the CGST Act to the extent it provides
for   payment   of   tax   finally   under   the   CGST   Act   by   the
date mentioned for filing FORM GSTR­3B;
(c) issue   an   appropriate   writ,   order   or   direction   in
nature of certiorari or any other writ, order or direction
of   like   nature,   to   call   for,   examine   the   records   in
relation to Circular No.26/2017 dated 29.12.2017 and

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quash   the   same   to   the   extent   it   does   not   provide   for
the modification of the information in the return of the
tax  period   to   which   such   information   relates   as   being
arbitrary,   in   violation   of   Articles   14,   19(1)(g),   265   and
300A of Constitution of India.
(d) issue   an   appropriate   writ,   order   or   direction
declaring   the   tax   liability   of   the   Petitioner   filed   under
FORM   GSTR­3B   is   provisional   and   the   output   tax
liability   of   the   Petitioner   will   only   crystalize   after   the
filing of FORM GSTR­1, 2 and 3.
(e) issue   an   appropriate   writ,   order   or   directions   in
the   nature   of   mandamus   or   any   other   writ,   directing
the   Respondents   to   operationalize/start   the   facility   of
FORM   GSTR­2   and   FORM   GSTR­3   for   period
commencing from 01.07.2017;
(f) issue   an   appropriate   writ,   order   or   directions   in
the   nature   of   mandamus   or   any   other   writ,   directing
the   Respondents   to   provide   the   Petitioner   the   facility
for   amendment   and   modification   of   FORM   GSTR­3B
and   grant   such   consequential   relief   as   may   be
necessary;
(g) Pass any orders as this Hon’ble Court may deem
fit in the given facts and circumstances of the present
case;” 
14. During   the   pendency   of   the   writ   petition,   Forms   GSTR­2,
GSTR­2A and GSTR­3 came to be operationalized w.e.f. September
2018.     The   Central   Government   then   issued   Notification
No.49/2019­Central Tax dated 09.10.2019, thereby omitting  Rule
61(6) w.e.f. 01.07.2017 and substituting Rule 61(5) from the same
date to read as follows:
“Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. 49/2019 – Central Tax

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New Delhi, the 9th October, 2019
G.S.R……(E).   ­   In   exercise   of   the   powers   conferred   by
section 164 of the Central Goods and Services Tax Act,
2017   (12   of   2017),   the   Central   Government   hereby
makes the following rules further to amend the Central
Goods and Services Tax Rules, 2017, namely:
(1) …..
(4)  In the said rules, in rule 61,­
(a)   for   sub­rule   (5),   the   following   sub­rule   shall   be
substituted,   with   effect   from   the   1 st
  July,   2017
namely:­ 
“(5)   Where   the   time   limit   for   furnishing   of   details   in
FORM   GSTR­1   under   section   37   or   in   FORM   GSTR­2
under   section   38   has   been   extended,   the   return
specified in sub­section (1) of section 39 shall, in such
manner   and   subject   to   such   conditions   as   the
Commissioner   may,   by   notification,   specify,   be
furnished   in   FORM   GSTR­3B   electronically   through
the   common   portal,   either   directly   or   through   a
Facilitation Centre notified by the Commissioner:
Provided   that  where  a  return  in  FORM  GSTR­3B  is
required  to  be  furnished by  a  person referred to in
sub­rule (1) then  such  person shall  not be required
to furnish the return in FORM GSTR­3 ;
…..”
(emphasis supplied)
We   have   adverted   to   this   Notification   whilst   noting   that   validity
thereof   has   not   been   challenged,   though   it   has   come   into   effect
from   01.07.2017   and   governs   the   period   between   July   and
September 2017, which is subject matter of this proceedings.  
15. Notably,   the   High   Court   did   not   set   aside   the   impugned
Circular   dated   29.12.2017,   but   preferred   to   read   down   only
paragraph   4   thereof   to   the   extent   it   restricted   the   rectification   of
Form   GSTR­3B   in   respect   of   period   in   which   the   error   had

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occurred.     For,   the   High   Court   was   of   the   view   that   the   stated
restriction was contrary to the provisions of the 2017 Act and the
Rules framed thereunder.
16. The   High   Court   in   its   judgment   took   note   of   the   repeated
technical   glitches   in   the   electronic   common   portal   introduced   by
the   Department,   during   the   transition   phase   from   the   erstwhile
regime   to   the   GST   regime.     The   High   Court   then   noted   that
respondent No.1 had submitted its monthly Form GSTR­3B based
on   estimates,   for   the   relevant   period   of   July   to   September   2017.
Further,   the   exact   ITC   in   the   electronic   credit   ledger   for   the
relevant period could be known to respondent No. 1 a month later
in   October   2018,   when   GSTR­2A   became   operational.     Only
thereafter,   respondent   No.   1   realized   that   there   had   been   an
excess payment of Rs.923 crores in cash for discharging OTL.   In
other   words,   despite   the   fact   that   a   bona   fide   error   had   occurred
for reasons beyond the control of respondent No. 1, yet respondent
No. 1 was unable to correct the mistake in Form GSTR­3B for the
relevant   period.     The   High   Court   held   that   CGST   contemplated   a
self­policing   system.     Resultantly,   the   statutory   provisions   had
provided for generation of auto­populated data of the stakeholders.
That   was   a   right   and   not   a   mere   facility   made   available   to

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registered   persons.     Thus,   every   registered   person   had   a   right   to
correct the returns in the very month to which they relate and not
visited   with   any   adverse   consequences   for   uploading   incorrect
data.  The High Court noted the admission of the Department that
the operation of Forms GSTR­2 and GSTR­3 could not be effected
due   to   technical   issues   at   their   end   necessitating   postponement
for   indefinite   period.     In   other   words,   the   Department   itself   was
not   fully   geared   up   to   handle   such   an   elaborate   electronic
procedure.     The   High   Court   further   noted   as   to   how   due   to   non­
functioning   of   Forms   GSTR­2   and   GSTR­3,   Rule   61(5)   and   61(6)
was   required   to   be   inserted   in   the   2017   Rules   and   provide   for
monthly return in Form  GSTR­3B, which was a summary return.
The  High  Court also  accepted  the contention  of respondent  No. 1
that   it   had   to   discharge   the   OTL   for   the   relevant   period   in   cash,
even   though   it   had   ITC   available   to   its   credit   in   electronic   credit
ledger,  due  to   the   fault   of  the   Department   in   not   operationalizing
the   statutorily   prescribed   Forms   GSTR­2,   GSTR­2A   and   GSTR­3.
That had resulted in excess payment of cash by respondent No.1.
The High Court also took note of the refund provisions to observe
that even if there was a possibility to adjust the accumulated ITC
in   future,  it  could   not  be  a   ground  to   deprive  respondent   No.1   of

15
its   option   to   fully   utilize   the   ITC   which   it   was   statutorily   entitled
to.    The   High   Court  held   that   there  was   no   reason  to  restrict   the
mechanism   of   rectification   to   the   returns   of   subsequent   months.
It   also   held   that   paragraph   4   of   the   impugned   Circular   dated
29.12.2017 was not in consonance with the provisions of the 2017
Act.  
17. Accordingly,   the   High   Court   allowed   the   writ   petition   and
permitted respondent No.1 to rectify Form GSTR­3B for the period
to   which   the   ‘error   relates’   i.e.,   the   months   of   July   to   September
2017.     The   operative   directions   issued   by   the   High   Court   read
thus:
“24.   Thus,   in   light   of   the   above   discussion,   the
rectification of the return for that very month to which
it relates is imperative and, accordingly, we read down
para 4 of the impugned Circular No. 26/26/2017­GST
dated   29.12.2017   to   the   extent   that   it   restricts   the
rectification of Form GSTR­3B in respect of the period
in which the error has occurred. Accordingly, we allow
the present petition and permit the Petitioner to rectify
Form   GSTR­3B   for   the   period   to   which   the   error
relates,   i.e.   the   relevant   period   from   July,   2017   to
September, 2017. We also direct the Respondents that
on   filing   of   the   rectified   Form   GSTR­3B,   they   shall,
within   a   period   of   two   weeks,   verify   the   claim   made
therein   and   give   effect   to   the   same   once   verified.   In
view   of   the   fact   that   the   final   relief   sought   by   the
Petitioner has been granted and the petition is allowed,
no   separate   order   is   required   to   be   passed   in   the
application seeking interim relief. Accordingly, the said
application is disposed of as such.”
18. The   appellant   has   assailed   the   view   so   taken   by   the   High
Court.     At   the   outset,   it   was   urged   that   the   High   Court   had   no

16
territorial   jurisdiction   to   entertain   the   writ   petition   filed   by
respondent No.1.   This objection is founded on the argument that
the   source   of   power   to   levy   and   collect   GST   under   the   2017   Act
vests   both   in   the   State   and   the   Centre.     The   Delhi   High   Court
could   not   have   decided   the   issues   concerning   other   State(s)   and
that   too   without   making   them   as   party   respondent.         The   writ
petitioner has chosen to only implead the Council which is a body
created only to decide about the policy and is not a tax collector as
such.  Thus, besides the High Court had no territorial jurisdiction,
the writ petition suffered from the   vice   of non­joinder of necessary
parties.  
19. As regards the merits, the appellant has invited our attention
to the constitutional background and the erstwhile regimes of the
central   excise   law,   service   tax   law   etc.,   and   in   contrast,   the
dispensation   provided   in   the   GST   regime   and   the   obligation   of
every outward supplier  to pay  OTL.   It is urged that the GST is a
beginning of a new era of cooperative federalism and the purport of
Article 246A read with Article 279A of the Constitution fortify that
position.     It   is   a   regime   to   bring   about   paradigm   shift   in   the
erstwhile   taxes   such   as   excise   duty,   service   tax,   entry   tax,   VAT
and   other   additional   and   minor   levies   based   on   multiple   taxable

17
events,   which   have   been   subsumed   into   one   taxable   event   called
“supply   of   goods   and   services”.     The   new   dispensation   enables
both the Union of India and the respective States to become joint
federal   partner   in   taxing   goods   and   services   simultaneously   and
have equal rates on the occurrence of the taxable event.   Notably,
the 2017 Act is not ascribable to any Entry in List I, List II or for
that matter, List III.   It is a   sui generis   regime in the Constitution
by   virtue   of   Article   246A   read   with   Article   279A   and   the   field   of
taxation thereunder is goods and services and the power to tax is
simultaneous and coextensive.
20. Shri   N.   Venkataraman,   learned   Additional   Solicitor   General
of India, took us through the provisions of the 2017 Act regarding
payment   of   duties/taxes   and   availing   of   ITC   including   the
eligibility   and   utilization   of   ITC.     As   regards   the   eligibility   and
utilization   of   ITC,   there   is   a   statutory   duty   fastened   on   every
registered   person   governed   under   various   regimes   and   presently
under the GST law, to pay OTL and a corresponding right to avail
and   utilize   ITC,   subject   to   eligibility   and   conditions   specified
therefor.     The   right   to   claim   ITC,   being   a   statutory   right,   is
circumscribed   by   conditions   and   restrictions,   subject   to   which   a
registered   person   is   entitled   to   take   credit.     The   provisions

18
regarding   entitlement   of   ITC   enable   a   registered   person   to   utilize
the   same   for   discharging   the   OTL.     It   is   imperative   upon   a
registered   person   to   maintain   records   regarding   transactions
between   suppliers   and   the   recipients   based   on   their   agreements,
invoices and  books of accounts, either  manually  or  electronically.
The   records   so   maintained   by   the   registered   person   would   itself
reveal about the eligibility to credit; and its availment is within the
exclusive domain of the supplier and the recipient concerned.  The
registered person under the law is obliged to do a self­assessment
of its transactions and determine the OTL and exercise the option
to avail of and utilize the ITC to the extent required or to pay the
OTL by  cash.   The Authorities have no role to play  whatsoever  in
that   regard.     It   is   an   option   to   be   exercised   by   the   registered
person   and   not   by   the   Authorities.     This   principle   has   remained
the same both before the GST and also post GST regime.   Indeed,
the registered person has been provided with a common electronic
portal   or   tax   electronic   portal,   which   is   only   an   enabler   and   a
facilitator   in   bringing   on   board   all   the   registered   persons   which
include   the   supplier,   recipient,   registered   person   and   other
recipients.     The   efficacy   of   common   electronic   portal   or   so   to   say
malfunctioning   thereof,   does   not   extricate   the   registered   person

19
from   the   primary   obligation   of   self­assessment   of   OTL   as
predicated   in   Section   16   of   the   2017   Act.     For   doing   so,   the
registered   person   is   obliged   to   maintain   accounts   and   records   as
envisaged under Chapter VII of the 2017 Rules.   That ought to be
the   basis   for   self­assessment   of   OTL   in   the   first   place.     On   the
basis   of   the   facts   and   figures   emanating   from   such   records,   the
registered   person   can   collate   the   relevant   information   regarding
entitlement to avail ITC collected from supplier of goods or services
or for both which are used or intended to be used in the course of
furtherance   of   his   business.     Suffice   it   to   observe   that   the
registered person is expected to exercise the option of utilizing ITC
or   to   pay   by   cash   for   discharging   his   OTL   at   the   time   of   filing   of
return on the information gathered from the primary record in his
possession.  
21. The   eligibility   and   availment   of   ITC   is   indeed   subject   to
conditions   and   restrictions   in   the   manner   specified   in   Section   49
of  the  2017 Act.   If  the registered person  intends  to  avail ITC,  he
can   do   so   by   paying   the   OTL   from   his   electronic   credit   ledger
referred   to   in   Sections   2(46)   and   49(2)   of   the   2017   Act.     He   can
avail of ITC on the conditions specified in Section 16(2) read with
Sections   41   and   49(2)   of   the   2017   Act.     As   per   Section   59   of   the

20
2017   Act,   every   registered   person   is   required   to   self­assess   the
taxes   payable   under   the   2017   Act   and   furnish   a   return   for   each
tax period as specified under Section 39 of the 2017 Act.
22. It   is   urged   that   the   scheme   of   the   2017   Act   makes   it   amply
clear   that   the   obligation   in   the   matter   of   deciding   about   the
eligibility and mode of payment of OTL including self­assessment,
is   to   be   exercised   by   the   registered   person   himself   and   the
Authorities   have   no   role   to   play   at   that   stage.     The   registered
person   cannot   find   fault   with   the   deficiencies   in   the   common
electronic   portal   so   as   to   extricate   from   this   obligation.     Similar
obligation   was   required   to   be   discharged   by   him   even   before   the
GST   regime   came   into   being   vide   the   2017   Act   with   effect   from
01.07.2017.     The   functions   or   features   provided   in   the   common
electronic   portal   of   auto   matching   and   auto   populating   of   the
record of the  supplier  and the recipient and   vice  versa   are only  a
facility   made   available   to   the   registered   person.     The   features
provided   in   the   context   of   Sections   42   and   43   of   the   2017   Act
relating   to   ITC   and   OTL,   are   dynamic   and   seamless   processes   of
matching of invoices of the supplier and the recipient.  The invoice
matching   mechanism   contemplated   under   Sections   42   and   43,
was   expected   to   be   accomplished   by   the   introduction   of   a   set   of

21
forms,   namely,   GSTR­1,   GSTR­1A,   GSTR­2,   GSTR­2A   and   GSTR­
3.     As   per   the   mechanism   predicated   in   the   2017   Act,   the   entire
exchange   processes   were   intended   to   happen   between   11 th
  and
17 th
 of every following month and once the reconciliation gets over,
every   registered   person   had   to   file   a   monthly   return   in   Form
GSTR­3 by 20 th
 of the following month and discharge his OTL.  As
aforesaid, to overcome the initial problems faced after introduction
of   the   common   electronic   portal   and   the   non­operability   of   the
concerned forms, it was decided to make a stop gap arrangement
enabling   the   registered   person   to   file   his   return   electronically   in
Form GSTR­3B, which contains necessary information relevant for
completing   the   self­assessment   process   and   payment   of   OTL,   if
any.     Though   a   stop   gap   arrangement,   it   was   always   treated   as
return   within   the   meaning   of   Section   39   of   the   2017   Act.     Any
rectification regarding omission or incorrect particulars referred to
therein, could be furnished in the month or quarter during which
such omission or incorrect particulars came to be noticed.  Taking
any   other   view   would   result   in   ushering   in   inconsistency   and
uncertainty  not  only   to  the  concerned  registered  person,   but  also
to   his   recipient   and   supplier   and   other   records   not   directly
connected   with   the   registered   person.     Hence,   allowing

22
correction/rectification  of  Form  GSTR­3B  of the concerned period
is not permissible in the new dispensation; and for which reason,
an   express   provision   had   been   made   in   Section   39(9) 9
  that
rectification   regarding   omission   or   incorrect   particulars   in   the
return   so   filed   can   be   effected   for   the   month   or   quarter   during
which  such  omission  or  incorrect  particulars  are  noticed  and  not
in   the   concerned   return.     The   corrections   permitted   in   Forms
GSTR­1   and   GSTR­2   are   of   different   nature,   whereas   the   return
filed in Form GSTR­3B for the relevant period ought to remain as
it is.
23. It is further urged that Sections 37 and 38 of the 2017 Act do
not provide for right relating to eligibility of ITC.  The obligation to
do self­assessment of ITC and of OTL and to pay the self­assessed
OTL by using the ITC or by cash payment, is a matter of exercising
9   39. Furnishing of returns.­ 
(1) to (8) …..
(9)   Subject   to   the   provisions   of   sections   37   and   38,   if   any   registered
person   after   furnishing   a   return   under   sub­section   (1)   or   sub­section   (2)   or
sub­section   (3)   or   sub­section   (4)  or   sub­section   (5)   discovers   any   omission
or   incorrect                                   particulars   therein ,   other   than   as   a   result   of
scrutiny,   audit,   inspection   or                                 enforcement   activity   by   the   tax
authorities,   he  shall  rectify  such  omission   or  incorrect  particulars  in   the
return   to   be   furnished   for   the   month   or   quarter   during   which   such
omission   or   incorrect   particulars   are   noticed ,   subject   to   payment   of
interest under this Act:
Provided   that   no   such   rectification   of   any   omission   or   incorrect
particulars shall be allowed after the due date for furnishing of return for the
month of September or second quarter following the end of the financial year,
or the actual date of furnishing of relevant annual return, whichever is earlier.
(emphasis supplied)

23
option   for   electing   the   mode   of   discharge   of   OTL.     Further,
reconciliation   predicated   under   Sections   37   and   38   between   the
outward supplier, registered person and the subsequent recipient,
does not impact the rights and obligations of the registered person
regarding   self­assessment   of   OTL   and   the   duty   to   pay   the   self­
assessed OTL in the manner he wants to discharge by using self­
assessed ITC or cash payment.
24. It   is   urged   that   the   option   so   exercised   by   the   registered
person is his own volition and the Authorities have no concern or
any   role   to   play   at   that   stage.     The   High   Court   has   completely
glossed   over   this   crucial   aspect   and   proceeded   to   answer   the
matter   in   issue   being   swayed   by   the   fact   that   common   electronic
portal   had   faced   rough   weather   during   the   initial   phase   and   that
the statutory forms were not operationalized.  The High Court was
impressed by the argument of the writ petitioner that due to non­
operability   of   the   stated   forms,   the   writ   petitioner   was   denied   of
access   to   the   relevant   information,   in   particular   about   the   ITC
amount   in   its   electronic   credit   ledger.     This   plea   could   not   have
been taken by the writ petitioner considering the obligation of self­
assessment of ITC and of OTL and duty to pay self­assessed OTL.
The   eligibility   of   ITC   and   the   right   to   exercise   option   to   pay   the

24
OTL through the mode of his choice would come later.   For doing
the   self­assessment,   the   registered   person   is   fully   equipped   with
accounts   and   records   maintained   by   him   as   per   the   statutory
requirement, which are in his complete control and knowledge.  In
other   words,   the   High   Court   committed   manifest   error   in   opining
that the stipulation specified in the impugned Circular, is contrary
to   the   provisions   of   the   2017   Act;   whereas,   express   provisions   of
the   2017   Act   provide   to   the   contrary.     Further,   the   High   Court
erroneously   assumed   that   the   writ   petitioner   had   submitted   the
monthly Form GSTR­3B for the period of July to September 2017,
based on its estimate.   The writ petitioner cannot be permitted to
take such a plea despite the statutory requirement of maintaining
accounts and records as provided by  the 2017 Act  and the Rules
framed thereunder.  Furthermore, effecting correction/rectification
in   the   returns   for   the   month   or   quarter   during   which   such
omission   or   incorrect   particulars   have   been   noticed,   does   not   in
any   way   result   in   denying   the   right   to   avail   ITC.     The   fact   that
respondent   No.1   would   not   be   eligible   to   get   refund   of   cash   also,
cannot   be   the   basis   to   permit   the   registered   person   to   swap   the
entry in the electronic cash ledger with the entry in the electronic
credit ledger or  vice versa.   No such mechanism has been provided

25
in   the   2017   Act   or   the   Rules   framed   thereunder.     If   permitted,
even as one of the cases because of  non­operability  of the forms at
the   relevant   time,   may   result   in   chaotic   situation   and   collapse   of
the   tax   administration   of   the   Union,   States   and   the   Union
Territories.
25. Per   contra ,   learned   counsel   for   respondent   No.   1   has
supported   the   reasons   as   had   weighed   with   the   High   Court   in
upholding   the   challenge   and   reading   down   paragraph   4   of   the
impugned  Circular  dated 29.12.2017 to  the  extent it restricts the
rectification of Form GSTR­3B in respect of the period in which the
error had occurred.  It is emphasized that Form GSTR­3B is only a
stop   gap   arrangement   to   overcome   the   technical   glitches   in   the
common   electronic   portal   and   non­operability   of   the   concerned
statutory   forms   enabling   auto­populating   of   relevant   entries   and
records.  The fact that circumstances prevalent at the initial stages
of   introduction   of   common   electronic   platform   has   been
acknowledged by  the authorities and introduction of Form GSTR­
3B   is   a   testimony   of   that   admission.     Having   done   so,   it   was   not
open   to   the   authorities   to   deny   the   taxpayers   their   dues,   in
particular,   right   to   revise   their   returns   and   avail   of   ITC.     The
provision   made   in   the   impugned   Circular   dated   29.12.2017,   not

26
permitting   rectification   of   the   return   is   conceptually   flawed   and
not consistent with the legislative intent and the provisions of the
2017 Act and the Rules framed thereunder.  It denies the taxpayer
his   statutory  right   to  utilize   credits,  due   to  technical  problems   in
not   putting   the   electronic   platform   in   place.     The   respondent
realized that huge amounts of excess ITC is available in its books
only   after   Form   GSTR­2A   was   made   operational   in   September,
2018.   By not permitting  the respondent to avail of ITC shown in
the electronic credit ledger had resulted in collection of double tax
from the respondent and an unfair advantage to the Government.
Permitting   the   registered   person   to   avail   of   the   excess   ITC   in   its
electronic   credit   ledger,   cannot   be   considered   to   be   unfair
advantage taken by the taxpayer.
26. The 2017 Act provided that in a Business to Business (B 2 B)
transaction,   a   supplier   (of   goods/services)   and   a   recipient   (of
goods/services) would interact with each other through a common
electronic   portal   which   as   per   the   statutory   framework   was
required to provision for payment of tax and furnishing of returns
including availing/taking and utilization of credit.  Sections 37, 38
read with Section 42 of the 2017 Act and Rules 59 and 60 of the
2017 Rules are indicative of the features that were required to be

27
provided in the common portal.  It is supposed to provide for auto­
populating   of   the   records   of   supplier   and   the   recipient   including
the   facility   of   interaction   of   GSTN   through   Forms   GSTR­1,   1A,   2,
2A   and   3   and   generation   and   filing   of   periodical   returns.     It
contemplated an automatic matching, reversal and reclaim of ITC.
The   mechanism   for   rectification   has   been   envisaged   in   Section
39(9)   of   the   2017   Act,   which   is   subject   to   the   steps   to   be   taken
under   Sections   37   and   38   regarding   matching   and   verification.
The return to be filed in Form GSTR­3B had no such features and
was   only   a   stop­gap   arrangement,   as   the   mechanism   provided   in
Sections 37 and 38 was not put in place.  The provision regarding
rectification   under   Section   39(9),   therefore,   had   no   application   to
the stop­gap arrangement of filing return in Form GSTR­3B, much
less   for   the   relevant   period   (July   to   September   2017).     Hence,
reliance   placed   on   Section   39(9)   of   the   2017   Act   to   justify   the
stipulations specified in the impugned Circular dated 29.12.2017,
cannot be countenanced.
27. It is urged that Form GSTR­3B is a summary return and does
not   contain   the   invoice­wise   details.     The   recipient   who   had   no
access   to   the   vendor’s   returns   had   no   facility   to   verify   the
correctness   of   the   ITC   taken.     Form   GSTR­3B   is   a   consolidated

28
return wherein the assessee manually files its total credit, OTL etc.
The appellant cannot take advantage of its own failure of not being
able   to   operationalize   Forms   GSTR­2   and   GSTR­3   right   at   the
inception   when   the   provisions   of   the   Act   came   into   force.     It   is
unfair   and   inequitable   that   failure   of   the   department   should
benefit   the   department   by   forcing   the   registered   person   to
discharge   OTL.     On   the   other   hand,   the   assessees   were   given   to
understand right from 2015 that the system of return filing will be
automated under GST.   The entire industry and trade accordingly
contemplated   system   changes   based   on   these   declarations   i.e.,
return   filing   and   taking/utilizing   credit   will   be   on   the   basis   of
auto­populated   returns.     Notably,   three   days   before   the
implementation  of  GST, even though  Sections  37, 38,  39,  42  and
43 were notified and were brought into force, the appellant issued
Notification   No.   10/2017   ­   Central   Tax   dated   28.06.2017   stating
that   the   automated   system   will   not   be   implemented   and   a
summary   manual   return   under   Section   61(5)   in   Form   GSTR­3B,
which is “in lieu of” Form GSTR­3 has to be filed.  The parameters
specified   in   Form   GSTR­3   were   substituted   in   Form   GSTR­3B.
This   arrangement   was   soon   altered   by   issuing   Notification   No.
17/2017­Central   Tax   dated   27.07.2017,   thereby   amending   Rule

29
61(5)   retrospectively   with   effect   from   01.07.2017,   omitting   the
words   “in   lieu   of”   and   expressly   mentioning   that   Form   GSTR­3B
was introduced only till the period Sections 37 and 38 were not in
operation.     Further,   Form   GSTR­3B   was   only   a   stop­gap
arrangement   and   while   filing   of   Form   GSTR­2   is   operationalized,
Form   GSTR­3   of   the   preceding   tax   periods   will   be   automatically
generated   and   filled   after   acceptance/rejection   contemplated
under   Sections   37   and   38   of   the   2017   Act.     In   October   2019,   by
amending   Rule   61(5)   retrospectively   making   the   return   filed   in
Form   GSTR­3B   final   return,   the   automated   system   contemplated
under Sections 37 to 39 was formally done away with in the teeth
of statutory mandate.
28. According   to   respondent   No.   1,   it   is   only   after
operationalization   of   GSTR­2A   in   September,   2018   that   complete
data for July to September 2017 became available to it and on the
basis of which it wanted to revise the return filed for  that period.
It was  possible  to  do so  in  terms of  Circular   No. 7/7/2017 dated
01.09.2017,   which   predicated   that   the   details   furnished   in   Form
GSTR­3B   will   be   corrected   based   on   Forms   GSTR­1   and   GSTR­2
and will be auto­populated and will reflect in Form GSTR­3 in that
particular   month.     However,   that   was   done   away   with   by

30
introducing   impugned   Circular   No.   26/26/2017­GST   dated
29.12.2017.   The arrangement specified in the impugned Circular
was against the spirit of the Act and the Rules framed thereunder.
Hence,   the   High   Court   justly   recorded   that   finding.     It   is   urged
that rectification/adjustment mechanism for  the month when the
errors   are   noticed   is   contrary   to   the   scheme   of   the   2017   Act   and
would defeat the statutory right of the assessee by putting a fetter
to  not  avail the  ITC, though available  in  his account of  electronic
credit   ledger.     The   High   Court   rightly   read   down   paragraph   4   of
the impugned Circular dated 29.12.2017 and also issued direction
to allow the respondent to rectify Form GSTR­3B for the period to
which   error   relates   i.e.,   July   to   September   2017,   subject   to
verification   by   the   authorities   concerned.     This   was   obviously   an
equitable arrangement and not opposed to any provision of the Act
or the Rules.   This direction would enable the respondent to avail
of   the   ITC   from   the   surplus   shown   in   his   account   of   electronic
credit   ledger   and   the   excess   amount   paid   in   cash   would
correspondingly   be   reinstated   in   electronic   cash   ledger   of   the
respondent, which is to the tune of Rs.923 crores.   As a matter of
fact,   the   impugned   Circular   dated   29.12.2017   is   wholly   without
jurisdiction   as   it   arbitrarily   alters   the   statutory   framework.     It   is

31
also inconsistent with the return filing system under previous tax
regime, such as Service Tax Rules, Central Excise Tax Rules, Delhi
Value Added Tax Act, Income Tax Act etc.  In all these legislations,
it would have been open to the assessee to rectify the original self­
assessed return at a later point of time.   It is urged that the High
Court   was   competent   to   issue   writ   of   mandamus   as   it   has   been
done in the present case.
29. We   have   heard   Mr.   N.   Venkataraman,   learned   Additional
Solicitor General of India for the appellant and Mr. Harish N. Salve
and   Mr.   Tarun   Gulati,   learned   senior   counsel   appearing   for
respondent No. 1.
30. At   the   outset,   the   preliminary   issue   raised   by   the   appellant
regarding jurisdiction of the Delhi High Court to entertain the writ
petition   or   that   the   writ   petition   suffered   from   the   vice   of   non­
joinder   of   the   necessary   parties   including   that   the   High   Court
could not have issued a writ of mandamus, need not detain us.  As
regards   the   jurisdiction   of   the   Delhi   High   Court,   the   registered
office   of   respondent   No.   1  is   in   Delhi.     The   appellant   (respondent
in the writ petition) also has its office in Delhi.   The relief claimed
in the writ petition amongst others, was to challenge provisions of
the   central   Act   and   the   circulars   issued   by   the   competent

32
authority having its office in Delhi.   Hence, the jurisdiction of the
Delhi High Court cannot be a matter of any doubt.   Similarly, the
argument   of   the   appellant   that   State   Governments/Union
Territories   are   necessary   parties,   does   not   take   the   matter   any
further.   As   aforesaid,   the  writ   petitioner   was   not   challenging   the
individual   action   of   the   States   or   the   Union   Territories,   but   a
policy   decision   of   the   Central   authority   who   had   issued   the
impugned   Circular,   namely,   the   Commissioner   (GST).     If   the   writ
petitioner   succeeded   in   that   challenge,   the   consequential   relief
would   follow.     In   our   opinion,   non­impleadment   of   respective
States/Union   Territories   would   not   come   in   the   way   of   the   writ
petitioner   to   pursue   the   cause   brought   before   the   High   Court   by
way   of   subject   writ   petition.     Even   the   argument   regarding   High
Court   having   exceeded   jurisdiction   in   issuing   writ   of   mandamus,
does   not   commend   to   us.     If   the   conclusion   reached   by   the   High
Court   regarding   the   efficacy   of   impugned   Circular   was   to   be
upheld,   no   fault   can   be   found   with   the   directions   issued   by   it   in
paragraph   24   of   the   impugned   judgment,   reproduced   above.
Accordingly,   the   preliminary   objections   regarding   the
maintainability of the writ petition and the jurisdiction of the Delhi
High Court deserve to be rejected.

33
31. Another   issue   that   needs   to   be   decided   at   the   threshold   is
whether   the   impugned   Circular   dated   29.12.2017   issued   by   the
Commissioner (GST) is without authority of law.  Indisputably, the
Circular   has   been   issued   to   notify   the   clarification   given   by   the
Board   in   exercise   of   its   powers   conferred   under   Section   168(1)   of
the   2017   Act   in   order   to   consolidate   the   information   in   various
notifications   and   circulars   regarding   return   filing   and   to   ensure
uniformity   in   implementation   across   field   formations.     The
decision   was   taken   by   the   Board   after   considering   various
representations   received   seeking   clarifications   on   various   aspects
of   return   filing   such   as   return   filing   dates,   applicability   of
quantum   of   late   fee,   amendment   of   errors   in   submitting/filing   of
Form GSTR­3B and other related queries.  In strict sense, it is not
the direction issued by the Commissioner (GST) as such, but it is
notifying   the   decision(s)   of   the   Board   taken   in   exercise   of   its
powers   conferred   under   Section   168(1)   of   the   2017   Act.     It   is   a
different   matter   that   a   circular   is   issued   under   the   signatures   of
Commissioner (GST), but in essence, it is notifying the decision(s)
of   the   Board,   which   has   had   authority   and   power   to   issue
directions.  Accordingly, the argument that the impugned Circular

34
dated 29.12.2017 has been issued without authority of law, needs
to be rejected.
32. Reverting to the analysis of the issues and contentions done
by   the  High   Court,  it  is  primarily  focused  on  the   grievance  of   the
writ petitioner that due to non­operability of Form GSTR­2A at the
relevant   time   (July   to   September   2017),   it   had   been   denied   of
access to the information about its electronic credit ledger account
and   consequently,   availing   of   ITC   for   the   relevant   period   and
instead to discharge the OTL by paying cash to its vendors.  Thus,
it  has   resulted  in  payment  of  double  tax  and  unfair  advantage  to
the   tax   authorities   because   of   their   failure   to   operationalize   the
statutory   forms   enabling   auto­populating   statement   of   inward
supplies of the recipient and outward supplies including facility of
matching   and   correcting   the   discrepancies   electronically.     The
High Court, however, did not enquire into the cardinal question as
to   whether   the   writ   petitioner   was   required   to   be   fully   or   wholly
dependent   on   the   auto   generated   information   in   the   electronic
common platform for discharging its obligation to pay OTL for the
relevant period between July and September 2017.  The answer is
­   an   emphatic   No.     In   that,   the   writ   petitioner   being   a   registered
person, was under a legal obligation to maintain books of accounts

35
and records as per the provisions of the 2017 Act and Chapter VII
of   the   2017   Rules   regarding   the   transactions   in   respect   of   which
the OTL would occur.  Even in the past (till recently upto the 2017
Act   came   into   force),   during   the   pre­GST   regime,   the   writ
petitioner   (being   registered   person/assessee)   had   been
maintaining   such   books   of   accounts   and   records   and   submitting
returns on its own.  No such auto­populated electronic data was in
vogue.     It   is   the   same   pattern   which   had   to   be   followed   by   the
registered person in the post­GST regime.
33. As   per   the   scheme   of   the   2017   Act,   it   is   noticed   that
registered   person   is   obliged   to   do   self­assessment   of   ITC,   reckon
its eligibility to ITC and of OTL including the balance amount lying
in  cash  or  credit ledger  primarily  on the basis of his office record
and   books   of   accounts   required   to   be   statutorily   preserved   and
updated   from   time   to   time.     That   he   could   do   even   without   the
common   electronic   portal   as   was   being   done   in   the   past   till
recently   pre­GST   regime.     As   regards   liability   to   pay   OTL,   that   is
on the basis of the transactions effected during the relevant period
giving   rise   to   taxable   event.     The   supply   of   goods   and   services
becomes   taxable   in   respect   of   which   the   registered   person   is
obliged   to   maintain   agreement,   invoices/challans   and   books   of

36
accounts, which  can  be maintained manually/electronically.   The
common   portal   is   only   a   facilitator   to   feed   or   retrieve   such
information   and   need   not   be   the   primary   source   for   doing   self­
assessment.     The   primary   source   is   in   the   form   of   agreements,
invoices/challans, receipts of the goods and services and books of
accounts   which   are   maintained   by   the   assessee
manually/electronically.     These   are   not   within   the   control   of   the
tax   authorities.     This   was   the   arrangement   even   in   the   pre­GST
regime   whilst   discharging   the   obligation   under   the   concerned
legislation(s).   The position is no different in the post­GST regime,
both in the matter of doing self­assessment and regarding dealing
with eligibility  to ITC  and OTL.   Indeed, that self­assessment and
declarations   would   be   any   way   subject   to   verification   by   the   tax
authorities.   The role of tax authorities would come at the time of
verification of the declarations and returns submitted/filed by the
registered person.
34. Section   16   of   the   2017   Act   deals   with   eligibility   of   the
registered person to take credit of input tax charged on any supply
of goods or services or both to him which are used or intended to
be   used   in   the   course   or   furtherance   of   his   business.     The   input
tax credit is additionally recorded in the electronic credit ledger of

37
such   person   under   the   Act.     The   “electronic   credit   ledger”   is
defined   in   Section   2(46)   and   is   referred   to   in   Section   49(2)   of   the
2017   Act,   which   provides   for   the   manner   in   which   ITC   may   be
availed.  Section 41(1) envisages that every registered person shall
be entitled to take credit of eligible input  tax, as self­assessed, in
his   return   and   such   amount   shall   be   credited   on   a   provisional
basis to his electronic credit ledger.  
35. As aforesaid, every assessee is under obligation to self­assess
the eligible ITC under Section 16(1) and 16(2) and “credit the same
in   the   electronic   credit   ledger”   defined   in   Section   2(46)   read   with
Section   49(2)   of   the   2017   Act.     Only   thereafter,   Section   59   steps
in,   whereunder   the   registered   person   is   obliged   to   self­assess   the
taxes   payable   under   the   Act   and   furnish   a   return   for   each   tax
period   as   specified   under   Section   39   of   the   Act.     To   put   it
differently,   for   submitting   return   under   Section   59,   it   is   the
registered   person   who   has   to   undertake   necessary   measures
including of maintaining books of accounts for the relevant period
either   manually   or   electronically.     On   the   basis   of   such   primary
material,   self­assessment   can   be   and   ought   to   be   done   by   the
assessee about the eligibility and availing of ITC and of OTL, which

38
is reflected in the periodical return to be filed under Section 59 of
the Act.  
36. Section   59   does   make   reference   to   Section   39,   which   deals
with furnishing of returns, but the fact remains that for furnishing
of   returns,   preparatory   work   has   to   be   done   by   the   assessee
himself   and   is   not   fully   or   wholly   dependent   on   the   common
electronic portal for that purpose.  Just couple of weeks before the
relevant   period   between   July   and   September   2017,   the   writ
petitioner/respondent No. 1 had been doing that exercise which it
was   expected   to   continue   even   under   the   post­GST   scheme.     The
factum   of   non­operability   of   Form   GSTR­2A,   therefore,   is   flimsy
plea taken by the writ petitioner/respondent No. 1.   Indeed, if the
stated form was operational, the same would have come handy to
the writ petitioner for doing self­assessment regarding eligibility of
ITC and availing thereof.  But it is a feeble excuse given by the writ
petitioner/respondent   No.   1   to   assail   the   condition   specified   in
impugned Circular dated 29.12.2017 regarding the rectification of
the return submitted manually in Form GSTR­3B for the relevant
period (July to September 2017).
37. The   question   of   reading   down   paragraph   4   of   the   said
Circular   would   have   arisen   only   if   the   same   was   to   be   in   conflict

39
with  the   express   provision   in   the   2017  Act   and   the  Rules  framed
thereunder.     The   express   provision   in   the   form   of   Section   39(9)
clearly   posits   that   omission   or   incorrect   particulars   furnished   in
the return in Form GSTR­3B can be corrected in the return to be
furnished in the month or quarter during which such omission or
incorrect   particulars   are   noticed.     This   very   position   has   been
restated in the impugned Circular.  It is, therefore, not contrary to
the   statutory   dispensation   specified   in   Section   39(9)   of   the   Act.
The   High   Court,   however,   erroneously   noted   that   there   is   no
provision in the Act, which restricts such rectification of the return
in the period in which the error is noticed.  It is then noted by the
High   Court   that   as   there   is   no   possibility   of   getting   refund   of
surplus   or   excess   ITC   shown   in   the   electronic   credit   ledger,
therefore,   the   only   remedy   that   can   enable   the   writ   petitioner   to
enjoy the benefit of the seamless utilization of the ITC is by way of
rectification   in   its   annual   tax   return   (Form   GSTR­3B)   for   the
relevant   period.     Further,   the   High   Court   in   paragraph   23   of   the
impugned judgment, noted that the relief sought in the case before
it, was indispensable.   This logic does not commend to us.   For, if
there is no provision regarding refund of surplus or excess ITC in
the   electronic   credit   ledger,   it   does   not   follow   that   the   assessee

40
concerned   who   has   discharged   OTL   by   paying   cash   (which   he   is
free   to   pay   in   cash   in   spite   of   the   surplus   or   excess   electronic
credit ledger account), can later on ask for swapping of the entries,
so   as   to   show   the   corresponding   OTL   amount   in   the   electronic
cash ledger from where he can take refund.  Payment for discharge
of OTL by cash or by way of availing of ITC, is a matter of option,
which  having   been  exercised   by   the  assessee,  cannot   be  reversed
unless the Act and the Rules permit such reversal or swapping of
the   entries.     As   a   matter   of   fact,   Section   39(9)   provides   for   an
express   mechanism   to   correct   the   error   in   returns   for   the   month
or   quarter   during   which   such   omission   or   incorrect   particulars
have been noticed.
38. The   entire   edifice   of   the   grievance   of   the   writ   petitioner
(respondent No. 1) was founded on non­operability of Form GSTR­
2A during the relevant period, which plea having been rejected as
untenable   and   flimsy,   it   must   follow   that   the   writ
petitioner/respondent   No.   1   with   full   knowledge   and   information
derived   from   its   books   of   accounts   and   records,   had   done   self­
assessment   and   assessed   the   OTL   for   the   relevant   period   and
chose to discharge the same by paying cash.  Having so opted, it is
not   open   to   the   respondent   to   now   resile   from   the   legal   option

41
already   exercised.     It   is   for   that   reason,   the   respondent   has
advisedly propounded a theory that in absence of (electronic­auto
populated   record)   mechanism   made   available   as   per   Sections   37
and 38, return filed in Form GSTR­3B is not ascribable to Section
39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules.  This
is yet another untenable plea taken by respondent No. 1.  For, the
appellant having realized that the mechanism specified in Sections
37   and   38   of   the   2017   Act   cannot   be   put   in   place   due   to   non­
operability of the forms governing such mechanism, had to amend
the   rules   to   make   a   stop­gap   arrangement   until   the   entire
mechanism became operational.   Appellant not only amended the
statutory   rule   but   also   provided   for   filing   of   return   manually   in
Form   GSTR­3B   electronically   through   the   common   portal   with
effect   from   July   2017.     This   is   manifest   from   the
circulars/notifications   issued   from   time   to   time   including   the
timeline for submitting the returns.
39. It is futile to urge that Section 39(9) has no application to the
fact situation of the present case.  In that, allowing filing of return
in   Form­GSTR­3B   albeit   a   stop  gap  arrangement,   is   ascribable  to
Section   39   of   the   2017   Act   read   with   Rule   61   of   the   2017   Rules.
Indeed,   it   is   not   comparable   to   the   mechanism   specified   for

42
electronically   generated   Form   GSTR­3   referable   to   Rule   61.
Nevertheless,   Form   GSTR­3B   is   prescribed   as   a   “return”   to   be
furnished   by   the   registered   person   and   by   the   subsequent
amendment   of   Rule   61(5)   brought   into   force   with   effect   from
01.01.2017,   it   has   been   clarified   that   such   person   need   not
furnish   return   in   Form   GSTR­3   later   on.     Notably,   the   validity   of
that   amendment   including   that   of   Notification   dated   09.10.2019
bearing No. 49/2019, is not put in issue before us.  
40. No   doubt,   in   the   initial   stages,   it   was   notified   that   Form
GSTR­3B   will   be   in   lieu   of   Form   GSTR­3   but   that   was   soon
corrected by deletion of that expression.   At the same time, as the
mechanism   for   furnishing   return   in   terms   of   Sections   37   and   38
was   not   operationalized   during   the   relevant   period   (July   to
September 2017) and became operational only later, the efficacy of
Form   GSTR­3B   being   a   stop   gap   arrangement   for   furnishing   of
return,   as   was   required   under   Section   39   read   with   Rule   61,
would   not   stand   whittled   down   in   any   manner.     It   would   still   be
considered   as   a   return   for   all   purposes   though   filled   manually
electronically.
41. The Gujarat High Court in the case of  AAP & Co., Chartered
Accountants through Authorized Partner vs. Union of India &

43
Ors. 10
,   was   called   upon   to   consider   the   question   whether   the
return   in   Form   GSTR­3B   is   the   return   required   to   be   filed   under
Section 39 of the 2017 Act.   Although, at the outset it noted that
the   concerned   writ   petition   had   been   rendered   infructuous   but,
went   on   to   answer   the   question   raised   therein.     It   took   the   view
that   Form   GSTR­3B   was   only   a   temporary   stop­gap   arrangement
till due date of filing of return Form GSTR­3 is notified.  We do not
subscribe   to   that   view.     Our   view   stands   reinforced   by   the
subsequent amendment to Rule 61(5), restating and clarifying the
position   that   where   return   in   Form   GSTR­3B   has   been   furnished
by   the   registered   person,   he   shall   not   be   required   to   furnish   the
return in Form GSTR­3.   This amendment was notified and came
into   effect   from   01.07.2017 11
  retrospectively.     The   validity   of   this
amendment has not been put in issue.
42. The  Delhi   High   Court  in   the   impugned  judgment,  has   taken
note   of   decision   of   the   Andhra   Pradesh   High   Court   in   case   of
Panduranga Stone Crushers vs. Union of India & Ors. 12
   This
decision dealt with the period between July 2017 and March 2018
for   the   financial   year   2017­2018.     The   petitioner   therein   had
10  2019-TIOL-1422-HC-AHM-GST
11  Vide Notification/GSR No. 772(E) dated 9 th
 October, 2019
12   2019-TIOL-1975-HC-AP-GST

44
submitted Form GSTR­3B return through GST portal, as required.
While   doing   so,   he   had   inadvertently   and   by   mistake   reported
IGST input tax credit in a column relating to import of goods and
services   instead   of   placing   that   particular   amount,   namely,   IGST
input   tax   credit   in   all   other   ITC   column.     The   writ   petitioner
asserted   that   he   was   entitled   to   rectify   such   mistake   which   had
crept   in   Form   GSTR­3B   returns.     The   Union   of   India   had
contended that said situation was covered by Section 39(9) of the
2017 Act and the petitioner could rectify the omission, but did not
avail   the   chance   to   rectify   or   modify   the   returns.     Therefore,   he
was   not   entitled   to   relief   as   claimed   in   the   writ   petition.     The
Andhra   Pradesh   High   Court   relied   on   the   decision   of   the   Gujarat
High   Court   in   AAP   &   Co. 13
  and   the   decision   of   the   Kerala   High
Court   in   Saji   S.   Proprietor,   Adithya   and   Ambadi   Traders   &
Anr.   vs.   The   Commissioner,   State   GST   Department   &   Anr. 14
,
wherein   the   Kerala   High   Court   had   permitted   the   request   for
transfer   of   tax   liability   from   the   head   “SGST”   to   “IGST”,   enabling
the   registered   person   to   carry   out   rectification.     The   Andhra
Pradesh High Court allowed the petitioner to follow the same suit.
The view taken in these decisions though not assailed before this
13   supra at Footnote No. 10
14  dated 12.11.2018 in  W.P.(C) No. 35868/2018

45
Court cannot impact the logic commended to us in this judgment
on   the   basis   of   interpretation   and   application   of   the   relevant
provisions to the facts of this case.
43. The  Delhi   High   Court  in   the   present   case   then   relied  on  the
decision   of   the   Punjab   &   Haryana   High   Court   in   the   case   of
Adfert   Technologies   Pvt.   Ltd.   vs.   Union   of   India   &   Ors. 15
    In
that   case,   the   petitioner   was   unable   to   file   return   before
31.12.2017   being   the   extended   time   due   to   heavy   load   upon
accountants, who were having number of assesses, lack of proper
knowledge   of   computer   system,   complexity   in   filling   different
columns of TRAN­1 etc.   The Punjab & Haryana High Court noted
that GST was an electronic based tax regime and most of people of
India were not conversant with electronic mechanism and not able
to load simple forms electronically.  Be it noted that the factum of
inability to access the electronic portal to submit return within the
specified   time   due   to   technical   faults   in   the   portal   is   entirely
different   than   the   assertion   to   grant   adjustment   of   amount
voluntarily paid in cash by the assessee towards OTL.   The latter
can be allowed only if the law enacted by the Parliament expressly
permitted   such   swapping   of   entries   of   the   electronic   credit   ledger
vis­a­vis   electronic   cash   ledger;   and   certainly   not   permissible   in
15   2019-TIOL-2519-HC-P&H-GST

46
the teeth of Section 39(9) of the 2017 Act.  Relying on the decision
of   the   Gujarat   High   Court   in   Siddharth   Enterprises   vs.   The
Nodal Officer 16
, however, the Court noted that denial of credit of
tax/duty   paid   under   existing   Acts   would   amount   to   violation   of
Article   14   and   300A   of   the   Constitution   of   India.     It   noted   that
unutilized credit has been recognized as vested right and property
in terms of Article 300A of the Constitution.  This decision was on
facts   of   that   case   concerning   erroneous   entry   recorded   in   Form
GSTR­3B   and   not   regarding   right   asserted   to   swap   the   mode   of
payment   of   OTL   in   cash   to   be   adjusted   against   electronic   credit
ledger as in the present case in the guise of rectification of return
filed in Form GSTR­3B for the earlier period.
44. Reference   was   then   made   to   decision   of   this   Court   in   MRF
Ltd.,   Kottayam   vs.   Asstt.   Commissioner   (Assessment),   Sales
Tax   &   Ors. 17
,   wherein   it   is   held   that   a   person   may   have   a
legitimate   expectation   of   being   treated   in   a   certain   way   by   an
administrative   authority,   even   though   he   has   no   legal   right   in
private   law   to   receive   such   treatment.     The   High   Court   then
referred to the decision of Delhi high Court in  Krish Authomotors
16   2019-TIOL-2068-HC-AHM-GST
17   (2006) 8 SCC 702

47
Pvt.   Ltd.   vs.   Union   of   India   &   Ors. 18
,   which   had   permitted   the
writ petitioners to either submit the TRAN­I form electronically by
opening  the  electronic  portal  or  to  tender  the  said  form   manually
before   the   specified   date   and   thereafter   to   process   the   claim   for
ITC   in   accordance   with   law.     The   Punjab   &   Haryana   High   Court
agreed   with   the   view   taken   by   the   Gujarat   High   Court   and   the
Delhi   High   Court.     The   conclusion   so   recorded   by   the   Punjab   &
Haryana High Court will have no bearing on the facts of this case
in light of the opinion expressed in this judgment, as we have held
that   consequent   to   submission/filing   of   Form   GSTR­3B,   as
envisaged by  the 2017 Act, it can be rectified only  in the manner
specified in Section 39(9) read with Rule 61(5), as applicable at the
relevant time.  In other words, the rectification can be done only in
the   return   to   be   furnished   in   the   month   or   quarter  during   which
such  omission  or  incorrect particulars  are  noticed and not  in the
return for the period to which it relates.  
  
45. The High Court in the impugned judgment, has also adverted
to   the   decisions   of   the   Delhi   High   Court   in   Blue   Bird   Pure   Pvt.
Ltd.   vs.   Union   of   India   &   Ors. 19
  and   in   Lease   Plan   India
Private Limited vs. Government of National Capital Territory
18   2019-TIOL-2153-HC-DEL-GST
19   2019 SCC OnLine Del 9250

48
of Delhi & Ors. 20
   For the same reasons, the conclusion reached
in the said two decisions will be of no avail to respondent No. 1.
46. We   need   not   multiply   the   authorities   referred   to   in   the
concerned judgments, and cited before us, as in our opinion, these
decisions   have   not   dealt   with   the   cardinal   aspect   of   statutory
obligation   fastened   upon   the   registered  person  to  maintain   books
of   accounts   and   record   within   the   meaning   of   Chapter   VII   of   the
2017 Rules, which are primary documents and source material on
the   basis   of   which   self­assessment   is   done   by   the   registered
person   including   about   his   eligibility   and   entitlement   to   get   ITC
and   of   OTL.     Form   GSTR­2A   is   only   a   facilitator   for   taking   an
informed   decision   while   doing   such   self­assessment.     Non­
performance   or   non­operability   of   Form   GSTR­2A   or   for   that
matter,   other   forms,   will   be   of   no   avail   because   the   dispensation
stipulated   at   the   relevant   time   obliged   the   registered   person   to
submit   returns   on   the   basis   of   such   self­assessment   in   Form
GSTR­3B   manually   on   electronic   platform.         The   provision
contained   in   Section   39(9)   of   the   2017   Act   and   Rule   61   of   the
Rules framed thereunder, as applicable at the relevant time, apply
with full vigor to the returns filed by the registered person in Form
GSTR­3B.  
20  d ecided on 13.9.2019 in W.P.(C) No. 3309/2019

49
47. Significantly,   the   registered   person   is   not   denied   of   the
opportunity   to   rectify   omission   or   incorrect   particulars,   which   he
could do in the return to be furnished for the month or quarter in
which such omission or incorrect particulars are noticed.  Thus, it
is not a case of denial of availment of ITC  as such.   If at all, it is
only   a   postponement   of   availment   of   ITC.     The   ITC   amount
remains intact in the electronic credit ledger, which can be availed
in the subsequent returns including the next financial year.  It is a
different   matter   that   despite   the   availability   of   funds   in   the
electronic   credit   ledger,   the   registered   person   opts   to   discharge
OTL   by   paying   cash.    That   is  a  matter   of   option   exercised   by   the
registered   person   on   which   the   tax   authorities   have   no   control,
whatsoever, nor they have any role to play in that regard.  Further,
there   is   no   express   provision   permitting   swapping   of   entries
effected in the electronic cash ledger   vis­a­vis   the electronic credit
ledger or  vice versa.   
48. A   priori ,   despite   such   an   express   mechanism   provided   by
Section 39(9) read with Rule 61, it was not open to the High Court
to   proceed   on   the   assumption   that   the   only   remedy   that   can
enable the assessee to enjoy the benefit of the seamless utilization
of   the   input   tax   credit   is   by   way   of   rectification   of   its   return

50
submitted   in   Form   GSTR­3B   for   the   relevant   period   in   which   the
error   had occurred.   Any  unilateral change in  such  return as  per
the   present   dispensation,   would   have   cascading   effect   on   the
recipients   and   suppliers   associated   with   the   concerned
transactions.  There would be complete uncertainty and no finality
could   ever   be   attached   to   the   self­assessment   return   filed
electronically.  We agree with the submission of the appellant that
any   indulgence   shown   contrary   to   the   statutory   mandate   would
not only be an illegality but in reality, would simply lead to chaotic
situation   and   collapse   of   tax   administration   of   Union,   States   and
Union   Territories.     Resultantly,   assessee   cannot   be   permitted   to
unilaterally   carry   out   rectification   of   his   returns   submitted
electronically in Form GSTR­3B, which inevitably would affect the
obligations   and   liabilities   of   other   stakeholders,   because   of   the
cascading effect in their electronic records.
49. As   noted   earlier,   the   matching   and   correction   process
happens on its own as per the mechanism specified in Sections 37
and 38, after which Form GSTR­3 is generated for the purposes of
submission   of   returns;   and   once   it   is   submitted,   any   changes
thereto   may   have   cascading   effect.     Therefore,   the   law   permits
rectification   of   errors   and   omissions   only   at   the   initial   stages   of

51
Forms   GSTR­1  and   GSTR­3,   but  in   the   specified  manner.   It  is   a
different   dispensation   provided   than   the   one   in   pre­GST   period,
which   did   not   have   the   provision   of   auto­populated   records   and
entries.
50. Suffice   it   to   conclude   that   the   challenge   to   the   impugned
Circular No. 26/26/2017­GST dated 29.12.2017, is unsustainable
for   the   reasons   noted   hitherto.     We   hold   that   stipulations   in   the
stated   Circular   including   in   paragraph   4   thereof,   are   consistent
with   the   provisions   of   the   2017   Acts   and   the   Rules   framed
thereunder.     Having   said   that,   it   must   follow   that   there   is   no
necessity   of   reading   down   paragraph   4   of   the   impugned   Circular
as has been done by the High Court vide impugned judgment.   In
any   case,   the   direction   issued   by   the   High   Court   being   in   the
nature of issuing writ of mandamus to allow the writ petitioner to
rectify Form GSTR­3B for the period ­ July to September 2017, in
the teeth of express statutory dispensation, cannot be sustained.
51. No other issue has been dealt with by the High Court except
to read down of the stated Circular, which as aforesaid, is wholly
unnecessary.
52. In   view   of   the   above,   this   appeal   is   allowed.     The   impugned
judgment   and   order   is   set   aside.     Resultantly,   the   writ   petition

52
filed   by   respondent   No.   1   before   the   High   Court   stands
dismissed. There shall be no order as to costs.
All applications stand disposed of.
………………………………J.
      (A.M. Khanwilkar)
………………………………J.
(Dinesh Maheshwari)
New Delhi;
October 28, 2021.