SUPREME COURT DENIES ₹ 923 CRORES GST REFUND TO AIRTEL

 SUPREME COURT DENIES ₹ 923 CRORES GST REFUND TO AIRTEL

The Supreme Court disallowed Airtel from seeking ₹923 crores Goods and Services Tax (GST) by setting aside the Delhi High Court order. The leading telecom company’s plea for rectification was allowed by the hon’ble high court, and a refund was instructed to be issued, which were paid in July-September 2017, in May 2020. The Apex court observed that rectification of such errors is permitted by law at the initial stage only.

The court further commented that the company cannot be allowed to unilaterally proceed to revise his returns which were submitted electronically in Form GSTR3B. Upholding the restriction on rectification by the GST Commissioner, the Court observed that allowing it would be an attack on the responsibilities and accountabilities of the other stakeholders because of the cascading effects in the electronic records.

The matter goes back to 2017 when GST was implemented for the first time in India, the company reportedly paid extra cash for GST that amounts to ₹923 crores in absence of any automated reconciliation at that time, not utilizing the available tax input credit. The company contended that as Form GSTR2A was non-operable at that particular period, it had been denied 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.

Taking note of technical glitches in the electronic forum of GST during the earliest moments, in May 2020, the High Court had asked the government to verify the claim by the company within two weeks of the rectified filing of Form GSTR3B and refund the amount once checked. The Centre soon enough knocked the doors of the Supreme Court against the Delhi High Court’s order of refund in July. The Supreme Court rejected the contention of non-operability of Form GSTR2A as a flimsy plea. The court declared that the High Court order cannot be sustained as at the particular period which is in question, the registered person had to submit the tax returns based on self­ estimation in Form GSTR­3B manually on the electronic platform. Agreeing with the Centre’s arguments, the Court said that any interference with the statutory mandate will lead to a chaotic situation and be illegal, collapsing the whole taxation system.

In its 50 page judgment in case name Union of India v. Bharti Airtel, the Supreme Court thrashed the Centre against the question of jurisdiction of Delhi Court and mandated that state governments are necessary parties before the High Court. However, the Court allowed the pleas against the grant of refund.

Post the Supreme Court judgment, the shares of Airtel closed 2% lower at Rs 688.80 on the Bombay Stock Exchange (BSE) on Thursday.

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