25 February 2019

Revision of returns & forms – Need for amendments

by Nipun Arora

GST is about to complete twenty months since implementation. Initially, it was expected that it will take an approximate time-period of two years for the industry to fully comprehend GST and be compliant with the provisions of GST law. However, it seems that more than the industry, tax administration appears to be lagging behind. Various steps are being taken by the government day in and day out such as amendments in law, series of GST Council meetings, multiple rate changes, detailed return filing processes being kept in abeyance, etc. It was anticipated that within a time span of two years, the essential procedures will get settled but with the present pace, it seems that it will take a longer time for streamlining of business processes under GST. Issues related to lack of facility for revising of returns filed and a recent judgement by High Court of Calcutta [Optival Health Solutions v. UOI, Order dated 7-2-2019] are discussed in the present article.
In GST, from the first day itself, it has been a point of discussion that the compliance burden is huge and the process is cumbersome requiring a lot of efforts and manpower. This was countered on the ground that automated software will take care of compliance burden and will aid in removal of manual intervention and ease the compliance process. However, due to lesser reach of software and affordability issues for a range of small taxpayers, many taxpayers are preparing their returns manually. Moreover, software also requires manual intervention such as extracting data, validation before filing of returns, etc.
Any incorrect input in the original data may also result in furnishing inappropriate information in returns. However, manual intervention increases this risk and there arises a need for revision. When we talk about returns, the context is not limited to monthly, quarterly or annual returns but also extends to all the forms required to be filed with the authorities for intimating the state of affairs at the end of taxpayer. All forms filed by taxpayers may be prone to error sometimes for which the taxpayers will have to seek correction through revision of such form. However, the system of revision as it existed under the erstwhile regime is not available in the GST regime in respect of most of such forms. In GST regime, in respect of certain forms, certain details filed in a particular return may be amended in subsequent returns / forms and only to such limited extent facility to revise has been provided.

In the erstwhile regime, whereas service tax law and VAT law in most of the States contained provisions in relation to revision of return, the provisions under excise laws were inserted from a later date for revision of returns. The provisions in relation to revision of return were something very common. The concept of “amendment” of particular entry in a return was something new for taxpayers.

Judgment of Calcutta High Court in the case mentioned in the first para wherein writ petition filed seeking revision of a particular form highlights the issue of absence of provisions and also requirement to amend the law to provide for the same. . The facts of this case are that petitioner had filed form GST TRAN 2. However, later the petitioner observed that some mistakes have been made while filing such form and revision of the same was required. However, in the absence of any legal provisions and any options available on the portal, the petitioner sought a direction to the department to allow them for revise/rectify their form GST TRAN 2 electronically or manually. The petitioner further contended that whereas Rule 120A of CGSTS Rules contained relevant provisions regarding revision of Form GST TRAN-1, similar provisions are not available with respect to Form GST TRAN-2.

The department contended that the transitional provisions are one time benefits given to persons entitled to avail such benefits and that a concessional provision was required to be strictly construed and that TRAN 2 was not a return and it was distinct and separate from TRAN-1. It was also contended that TRAN-1 was a vested right while TRAN-2 cannot be construed so and therefore, an assessee cannot be allowed to revise TRAN-2 form on the same reasoning and standing as that of TRAN-1 form.

The High Court observed that the law permits a person making an admission, the liberty of explaining the same, if he so chooses and Form GST TRAN 2can be considered as an admission to inform the state of affairs of the petitioner. It noted that neither the Act or rules can be read to mean as excluding the right of a person making admission, to forfeit the opportunity to explain it and to substantiate that such admission was made by mistake or was untrue. It directed that the petitioner should be provided an opportunity to explain Form GST TRAN 2. It saw no reason as to why a person filing form GST TRAN-2 should not be allowed to revise the same after the initial filing.

The above judgement may enable aggrieved taxpayers to move respective High Court and seek judicial redressal wherever the provisions are too harsh causing difficulties.. However, it is pertinent to note that relief has been granted by the High Court to the petitioner only in the present case and  in case any other taxpayer aggrieved similarly seeks such remedy, separate petition shall be required to be filed in jurisdictional High Court seeking redressal.

It is the time for the taxmen to understand the hardships faced by the taxpayers and provide for a proper method for revision of all forms and not only returns required to be filed as per law. This will not only benefit the taxpayer in ensuring better compliance but will also help the government in terms of increased revenue collections. Taxpayers also need to analyse the issues / cases where there exists a good merit for filing writ petition when provisions are absent in the law but the difficulties faced are genuine. 

[The author is a Senior Associate in GST practice, Lakshmikumaran & Sridharan, New Delhi]

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