GST ITC Rectification:
In High Court of Bombay by Aberdare Technologies Private Limited vs. Revenue [W.P. No. 7912 of of 2024]
Background of the Case
The petitioner, M/s Aberdare Technologies Pvt. Ltd. filed GST returns on time but later discovered certain errors. The petitioner sought manual rectification after missing the deadline, but the Revenue Department denied the request.
M/s Aberdare Technologies Pvt. Ltd., had filed a writ petition before the Bombay High Court challenging the denial of Input Tax Credit (ITC) by the GST department. The dispute arose due to an inadvertent clerical error in the petitioner’s GST returns, wherein the tax liability was mistakenly reported under an incorrect column. Although the petitioner had already paid the required tax, the mismatch led to the rejection of their ITC claim. Despite multiple representations, the tax authorities refused to allow rectification, prompting the petitioner to seek judicial intervention.
Arguments by the Appellant
The Appellant argued before the Bombay High Court that the error was purely technical, and the government had already received the tax. Hence, there is no revenue loss and the rejection of ITC was unjustified. The appellant contended that ITC is a substantive right under the GST framework, and denying it due to a procedural mistake violates the principles of natural justice. The appellant also highlighted Citing previous rulings, and argued that courts have consistently permitted rectifications when no revenue loss is involved.
The petitioner highlighted that the GST system does not provide adequate mechanisms for rectifying such errors, making it unreasonable to hold taxpayers liable for system constraints.
Respondent’s Response
The respondent argued that ITC can only be claimed if all procedural requirements under the GST Act are strictly followed. The authorities maintained that rectifications must be made within the statutory timeline, which the petitioner had failed to adhere to. The revenue insisted that procedural compliance is essential for maintaining uniformity and transparency in tax administration and technical error do not exempt the compliance.
Bombay High Court Findings and Decision
The Bombay High Court noted that the Taxpayer rights must be protected as ITC is a fundamental right under GST, and its denial due to a minor technical error goes against the intent of the law. Since the government had already received the tax, rejecting ITC on procedural grounds was unwarranted and unfair. The court emphasized that tax authorities should adopt a facilitative rather than a punitive approach, ensuring that genuine taxpayers do not suffer due to technical lapses. The ruling aligned with previous judgments that prioritized substantive justice over procedural rigidity. (In favor of appellant in Bombay High Court)
Supreme Court’s Affirmation
In Supreme Court of India by Revenue vs. Aberdare Technologies Private Limited [S.L.P (Civil) Diary No. 6332 of 2025]
Following the Bombay High Court’s ruling, the respondent, Revenue challenged the decision before the Supreme Court. However, the Supreme Court dismissed the petition, effectively upholding the High Court’s verdict. This decision further solidified the stance that minor clerical errors should not lead to the denial of legitimate ITC claims and reinforced the principle that tax administration should be taxpayer-friendly rather than excessively rigid.
GST ITC Rectification
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