Bharti Airtel can claim Rs 923 crore in refunds, says Delhi High Court

The case pertains to underreporting of input tax credit in the GST summary return form, GSTR 3B.

The Delhi High Court has allowed Bharti Airtel to claim a refund of Rs 923 crore by rectifying goods and services tax (GST) returns filed between July and September 2017.

The case pertains to underreporting of input tax credit in the GST summary return form, GSTR 3B, during those three months in 2017 due to absence of the purchase-related return form during the transition period.

The operator argued that in the absence of the statutory forms GSTR 2 and 3, the summary return form was introduced. It does not allow validation before uploading. In the absence of such validation, chances of incorrect details being uploaded could not be eliminated.

The HC said, “Indisputably, if the statutorily prescribed returns, GSTR-2 and GSTR-3 had been operationalised by the Centre, the petitioner would have known the correct input tax credit amount available to it in the relevant period, and could have discharged its liability through the tax credit.”

It said that as a consequence, the deficiency in reporting the eligible input tax credit in the months of July-September has resulted in excess payment of cash by the petitioner.

Harpreet Singh, partner, KPMG, said: “Any new law, would have its own set of open issues... Not having an ability to rectify the same is a bit harsh.”

Business fears hit to cash flow from new GST input tax credit restriction

Gupta of ClearTax feels a further reduction in credit could have been considered later.

Industry fears that the Goods and Services Tax (GST) Council’s decision to further restrict input tax credit (ITC) on invoices not uploaded in the relevant form would block the cash flow of businesses, says the latter, at a time when they’re struggling on finances due to economic slowdown.

On Wednesday, the Council approved a proposal to restrict ITC to 10 per cent of eligible credit, against the current 20 per cent, for such invoices.

The mechanism works this way: Suppose you paid Rs 1,000 as taxes to your suppliers and claimed this as ITC on your summary input-output form, GSTR 3B. You have to also ensure all your suppliers upload these invoices in their supply-side return, GSTR 2A. Now, if invoices amounting to 20 per cent of the ITC claimed are not so uploaded by your vendors, then your eligible credit would be only Rs 800. You can claim further ITC of Rs 80 (10 per cent of Rs 800) after the GST Council’s decision is notified. Earlier, you could have done so for Rs 160.

In fact, before October, whatever was claimed as ITC in GSTR 3B, was being released by the authorities. In October, the government restricted this to 20 per cent of eligible credit. And, now, to 10 per cent.

Archit Gupta, chief executive at fintech service platform ClearTax, says the new restriction will be challenging for businesses. "They will have to do regular follow-ups with their suppliers." M S Mani, partner at consultants Deloitte India, said the restrictions on ITC increase the blockages of working capital.

Rule 36 (4) under the Central GST Act, which enables such restrictions, is already under challenge at the Delhi high court.

"Businesses would welcome the elimination of such restrictions which are not in consonance with key GST principles which mandate seamless credits across the value chain," said Mani.

Abhishek Rastogi, partner at Khaitan & Co., said the restriction on credits due to the fault of the vendors will have to cross the constitutional test. "Further, even the percentage of either 10 or 20 per cent is not based on any logic and hence is completely arbitrary," he said.

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