Judgement of DHC in Bharti Airtel overruled by Hon’ble Supreme Court

Just a few months ago the Hon’ble Supreme Court had overruled the judgement of Hon’ble Gujarat High Court, in VKC Footsteps India Private Limited [2021 (9) TMI 626] and decided in favour of Revenue holding that refund of ITC on ‘input services’ is not available under inverted duty refund u/s 54(3) r/w Rule 89(5).

More recently, the Hon’ble Supreme Court on 28.10.2021, overruled the judgment of Hon’ble Delhi High Court, Bharti Airtel Ltd. [2021 (11) TMI 109] and allowed the appeal of the Department. The Hon’ble Delhi High Court had allowed rectification of   GSTR-­3B in respect of the period in which the error had occurred and allowed Refund of ₹ 923 crore to Bhatia Airtel Ltd.

Bharti Airtel, for the period of July’17 to September’17 had to pay its outward tax liability in cash on account of non-reflection of the ITC due to non-operational GSTR 2A form. GSTR-2A became operation only in the month of September’2018, and this was the time the Petitioner came to know about the exact ITC available to the Petitioner. The recalculation of the ITC showed that for the relevant period, the ITC had been underreported on account of lack of data.

The Ruling of Hon’ble Delhi High Court was challenged before the Hon’ble Supreme Court wherein the Hon’ble Supreme Court decided in favour of the revenue. The Hon’ble SC held that GSTR-2A is only a facilitator and the Petitioner was required to do its own self-assessment of its transaction and determine the OTL and exercise the option to avail of and utilize the ITC to the extent required or to pay the OTL by cash.

Author’s Comment:

Two continuous decisions of Hon’ble Supreme overruling the judgements and deciding in favour of Revenue has raised apprehensions in the mind of assessees who have won cases before various High Courts, in relation to the improper implementation of GST Law and the functionalities. Especially the SLPs which have been filed against the judgements of various High Courts allowing the TRAN-1 petitions.

However, there is a silver lining to it. Various TRAN-1 judgments of different High Courts were cited before the Hon’ble Supreme Court by  Bharti Airtel. The Hon’ble Supreme Court distinguished those cases holding that inability to access the electronic portal to submit return [TRAN-1 form] within the specified time due to technical faults in the portal is entirely different than the assertion to grant adjustment of amount voluntarily paid in cash by the assessee towards OTL.

Yuvraj is an advocate and has completed his B.A. LL.B(Hons) from RGNUL-Punjab. He is a practicing advocate and has been involved in matters pertaining to GST and other indirect taxes as well as Direct Tax. He is active in Writ Courts and has involvement in a few landmark judgments like Pitambra Books Pvt. Ltd. V. Union of India (W.P.C. No. 627 of 2020), and represented Sales Tax Bar Association (Delhi) to resolve GST issues and glitches.