Introduction: The visionary reforms of Digital Integration
At the dawn of GST’s (Goods and Services Tax) Introduction in India’s Tax policy,[1] the reform was heralded to bring about a paradigm shift, modernizing tax administration by integrating advanced technologies into the compliance process, simplifying the same, by embedding digital aids into the fabric of Tax collection, paving the way to a more streamlined and responsive fiscal environment.[2] However, the envisioned transformation is yet to materialize, and one critical issue, amongst many, stands out – the issue of denying rectification of errors in GSTR-1 and GSTR‑3B forms, under the Central Goods and Services Tax (CGST) Act,[3] following the lapse of prescribed statutory deadlines.[4]
Statutory Rectification Rights under the CGST Act
Section 37(3) of the CGST Act,[5] empowers taxpayer to amend omission and discrepancies in the GSTR‑1 up to November 30 of the subsequent financial year or until the relevant annual return is filed, whichever is earlier. Securing the right of correcting Bonafide errors to protect the legitimacy of Input Tax Credit claims preceding monthly filing deadlines. Likewise, Section 39(9) permits corrections to be made to summary Form GSTR-3B for any errors up until the September return filing deadline after the conclusion of the relevant fiscal year or the annual return filing date, whichever comes first.[6]
However, the technical architecture of the GST Portal imposes a differing, more stringent, correction timelines, restricting amendments to GSTR-1 to the eleventh day of the succeeding month, while completely prohibiting changes to GSTR-3B once it has been filed and submitted, offering no window for correction.[7]
According to the GST Act, monthly tax liabilities must be reported via the GST system, together with timely reports of inbound and outgoing supply.[8]
Practical Impact: ITC Denials and Taxpayer Hardship
Despite the fact that the goal of these laws is to provide an open and effective tax system, taxpayers frequently struggle with unfair ITC denials due to strict deadlines and software limitations, even when mistakes are made inadvertently.[9]
Despite the vision of ease in filing and compliance, system driven (automated) rejections coupled with inflexible procedures, have compelled the taxpayers to knock on court’s door in the pursuit of remedial reliefs,[10] finding themselves in protracted legal battles over clerical errors and minor mistakes, often leading to blocked credits, imposing unjustifiable financial strains.[11] Concurrently, clogging the courts with avoidable disputes.[12]
Judicial Interpretation and jurisprudence
The jurisprudence with respect to interpreting GST rectification provisions has witnessed a progressive trajectory, placing commercial practicalities and substantive fairness over rigid software enforcement deadlines. The Bombay High court in Star Engineers Pvt. Ltd. v. Union of India,[13] heard a plea of a taxpayer to amend GSTR‑1 returns for July 2021, November 2021, and January 2022, which the GST portal had barred due to time. Justice G.S. Kulkarni held that technical factors, such as the timelines of the portal, must not be allowed to “defeat the provisions” permitting bona fide corrections when no revenue is at stake, observing that “any technicality not making a window for such rectification ought not to override the substantive right to correct clerical or arithmetical errors”.[14] Consequently, directing the revenue authorities to enable online or manual amendments within four weeks.[15]
Similarly, in Veeran Mehhta v. Deputy Commercial Tax Officer,[16] the Madras High Court was confronted with a plea to address the mismatch in GSTR‑1 filings that had caused a Rs. 4.17 lakh input‑credit denial. Justice Senthilkumar Ramamoorthy acknowledged the existence of a prima facie case for rectification and underscored the petitioner’s financial hardship resulting from an inadvertent error. He emphasizing that procedural rigidity and the proviso to section 37,[17] must not curb the way of principles of natural justice in instances of bona fide and revenue-neutral mistakes, the Court ordered that the rectification petition be disposed of within three months and stayed any recovery proceedings in the interim, reaffirming the principle that GST compliance mechanisms should not operate punitively against honest taxpayers for genuine errors made beyond the portal’s constrained correction window.[18]
Aberdare Technologies: High Court’s and Supreme Court’s Rational
In the recent case of Aberdare Technologies,[19] both the Bombay High Court and the Supreme Court reiterated the same principles. The case originated when the assessee wanted to make changes to the GSTR-1 returns for the 2017–2018 fiscal year. However, because the time for these adjustments had already past, their plea was turned down. Any corrections must be made by November 30 of the subsequent fiscal year, according to Section 39(9).[20] The Union went to the Supreme Court after the Bombay High Court granted the assessee’s motion in contravention of this statutory restriction.
On July 29th, of 2024, the taxpayer before the Hon’ble Bombay High Court pleaded that “proviso to Section 37 of the CGST Act should not defeat the intention of the legislature, especially in cases of a bona fide and inadvertent error in furnishing particulars during the filing of returns, when there is no loss of revenue to the government.”[21] In holding so, it ruled against the GST Department, allowing taxpayers to correct unintentional errors without facing undue penalties or loss of ITC.
In permitting such rectification, the Court observed that inaccurate return particulars could trigger a serious cascading effect, adversely impacting not only the assesses but also third parties reliant on accurate filings. The Court further recognized that, unlike previous tax regimes, the GST framework operates entirely within an electronic domain, thereby increasing the likelihood of inadvertent errors—particularly for businesses with limited technical expertise and resources.
Supreme Court’s Review and Call for CBIC Clarification
Aggrieved by the decision of the Hon’ble High Court, the GST Department approached the Hon’ble Supreme Court of India. Analysing the matter, the bench, comprising Chief Justice of India Sanjiv Khanna, and Justices Sanjay Kumar, and KV Viswanathan, acknowledged that numerous taxpayers have faced similar issues due to minor clerical or computational mistakes. Despite of the Central Board of Indirect Taxes and Customs (CBIC) arguing that rectifications cannot be made beyond the stipulated time frame, the court stressed the need to establish realistic timelines for correcting Bonafide errors and issued a notice to CBIC seeking clarification on this matter.
The Hon’ble Supreme Court also took a critical stand against conflicting High Court decisions, especially those rendered in the Bar Code case (Punjab & Haryana High Court) and Yokohama India (Telangana High Court). Both rulings cited the Supreme Court’s previous ruling in Bharti Airtel,[22] to support their claims that taxpayers are not allowed to correct GST return errors after the legally mandated deadlines had passed. To distance itself from a strict proceduralist approach and to reiterate the need of substantive fairness in tax compliance, the Supreme Court stated that these interpretations do not amount to good law. Ensuring consistency in interpretation.
Broader Implications: Flexibility, Legal Lacuna, and Risks
By upholding the right to correct GST returns, the Court recognized the operational challenges faced by businesses and underscored that procedural rigidity should not obstruct legitimate tax entitlements.[23] This judgment is expected to prompt a re-evaluation of GST portal functionalities and foster a more flexible compliance environment. It also sends a clear message to tax authorities against adopting an excessively rigid stance, thereby reducing unnecessary litigation and enhancing taxpayer confidence in claiming rightful credits.[24]
On the contrary, the judgement has opened a legal lacuna, because if in a self-assessment regime like GST, businesses are allowed to correct errors post-deadline without penalty, the absence of strict cut-off enforcement could open avenues for deliberate manipulation under the pretext of ‘bona fide mistakes. Making the directive a double-edged sword: While advocating for greater flexibility, it simultaneously leaves room for ambiguity in the absence of clear guidelines, potentially enabling misuse by unscrupulous actors.[25]
Judgement being silent on the definitions of clerical or arithmetical errors exacerbates this concern, blurring the line between mistakes made inadvertently and tactical oversights, making the system vulnerable to interpretive inconsistencies and potential abuse.[26]
Conclusion
In the grand tapestry of India’s GST era, the promise of a sleek, tech-driven tax ecosystem still shimmers on the horizon, just out of reach. Our courts have repeatedly reminded us that statutes having rigid code shall be rationalized by practical implications of the code, rather than blind following of the same. Although recent judgements have championed the spirit of fairness over rigid procedural deadlines, offering taxpayers a crucial lifeline to rectify genuine errors without the looming threat of punitive denial of input tax credit, this victory is but a waypoint. Without a clear definition of clerical” or “arithmetical” errors, and without vigilant guardrails against strategic exploitation, this flexibility provided in good faith might slip into chaos.
Author: Devansh Sharma, Jindal Global Law School (Jindal Global University)
Click the link to read similar articles: https://jpassociates.co.in/gst-on-second-hand-goods/
[1] Central Goods and Services Tax Act, No. 12 of 2017, § 1(3)
[2] Central Goods and Services Tax Act, No. 12 of 2017, § 2(62)
[3] Central Goods and Services Tax Act, No. 12 of 2017
[4] TaxGuru, Rectification Timelines for GSTR‑1 Errors: Section 37(3) & First Proviso (Jan. 2024), https://taxguru.in/goods-and-service-tax/rectification-timelines-gstr-1-errors-section-37-3-proviso-explained.html (Apr. 20, 2025).
[5] Central Goods and Services Tax Act, No. 12 of 2017, § 37(3)
[6] Central Goods and Services Tax Act, No. 12 of 2017, § 39(9)
[7] CBIC, GSTR‑3B FAQs, https://www.cbic.gov.in (Apr. 20, 2025)
[8] Central Goods and Services Tax Act, No. 12 of 2017, §§ 37–39
[9] Central Goods and Services Tax Act, No. 12 of 2017, §§ 16(2)(d), 37(3), 39(9).
[10] Bharti Airtel Ltd. v. Union of India, 2021 SCC SC 660.
[11] M/s. Parle International v. Union of India, 2021 SCC Bom 4006.
[12] Kay Kay Industries v. Union of India, 2022 SCC 2779.
[13] Star Engineers Pvt. Ltd. v. Union of India, W.P. No. 5437 of 2023
[14] IBID
[15] IBID
[16] Veeran Mehhta v. Deputy Commercial Tax Officer, W.P. No. 5124 of 2023
[17] Central Goods and Services Tax Act, No. 12 of 2017, § 37(3)
[18] Veeran Mehhta v. Deputy Commercial Tax Officer, W.P. No. 5124 of 2023
[19] Aberdare Technologies v. Union of India, W.P. No. 6752 of 2024
[20] Central Goods and Services Tax Act, No. 12 of 2017, § 39(9)
[21] Aberdare Technologies v. Union of India, W.P. No. 6752 of 2024
[22] Bharti Airtel Ltd. v. Union of India, 2021 SCC SC 660.
[23] Surabhi, Supreme Court upholds buyers can correct clerical errors in GST filings without penalty, claim ITC, Business Today (Mar. 26, 2025).
[24] Revision of GST returns to be allowed even after deadline in these cases, rules SC, The Economic Times (Wealth) (Mar. 21, 2025).
[25] Hari Kumar, Why SC ruling on GST error corrections is a major relief for businesses, Business Standard (Mar. 27, 2025).
[26] SC Upholds Businesses’ Right to Correct Tax Errors, Ensures Buyers’ ITC Cannot Be Denied, CFO, The Economic Times (Mar. 26, 2025).
