The Calcutta High Court has considered an important issue concerning the rectification of errors in Form GST DRC-03, particularly where a taxpayer has voluntarily reversed Input Tax Credit (ITC) but subsequently discovers a clerical mistake in the form. The case raises significant questions regarding the absence of a statutory mechanism for correcting inadvertent errors in GST compliance forms and the consequences of such mistakes.
In Life Pharmaceuticals Private Limited & Anr. v. Assistant Commissioner of Revenue, Ballygunge Charge & Ors., the petitioner had voluntarily reversed excess ITC through Form GST DRC-03 during annual reconciliation. However, while filing the form, the place of supply was mistakenly selected as Maharashtra instead of West Bengal. This clerical error subsequently resulted in the adjudicating authority confirming a demand for reversal of ITC under the IGST head despite the petitioner asserting that all supplies had been received within West Bengal and the excess credit had already been voluntarily reversed.
The petitioner argued that the mistake was purely inadvertent and that it should not be compelled to reverse the same ITC twice merely because the GST portal does not presently provide any facility to amend Form GST DRC-03. The taxpayer also pointed out that no supplies had ever been received from Maharashtra and sought permission to rectify the place of supply in the voluntarily filed DRC-03.
The State opposed the petition, contending that once Form GST DRC-03 has been filed, the GST portal does not permit any amendment or rectification and that the issue had not been specifically raised before the adjudicating authority.
After considering the submissions, the Calcutta High Court found that the petitioner had made out a prima facie case. The Court directed the State authorities to obtain written instructions from the department on three crucial issues:
- Whether the mistake was a bona fide clerical error.
- Whether the department would object to permitting correction of the place of supply from Maharashtra to West Bengal after verification.
- Whether any mechanism exists, or can be devised, for rectifying such errors in Form GST DRC-03.
Pending further consideration, the Court restrained the GST authorities from taking any coercive steps against the petitioner until the next date of hearing.
This order is significant because it highlights a recurring practical difficulty faced by taxpayers under the GST regime—namely, the inability to rectify genuine clerical mistakes in Form GST DRC-03. The Court’s observations may have wider implications for taxpayers seeking correction of bona fide errors where the GST portal presently lacks an amendment mechanism.
Why Read This Judgment?
This decision will be of particular interest to GST practitioners, Chartered Accountants, Advocates, tax consultants, corporate tax teams and businesses dealing with voluntary tax payments through Form GST DRC-03. It discusses the scope for rectification of bona fide clerical errors, the principles governing voluntary ITC reversals, and the balance between procedural compliance and substantive justice under the GST law.
