Govt moves SC against Bharti Airtel in Rs 923 cr GST refund case

Seeks reversal of Delhi HC order favouring the firm, claiming that the company under-reported input tax credit

The central government has moved the Supreme Court challenging a Delhi High Court (HC) order that allowed Bharti Airtel to claim goods and services tax refund worth Rs 923 crore.

The case pertains to under-reporting of input tax credit in the GST summary return form, GSTR-3B, between July and September 2017 because of the absence of purchase-related return form, GSTR-2A, at that time. In May, the Delhi HC had allowed the telecom major to seek a refund by rectifying GST returns filed between July and September 2017.

The government has held that the Sunil Mittal-led company under-reported input tax credit, while the company argued that it paid excess tax on inputs, as the GSTR-2A form was not operational at the time. The form allows for validation before uploading.

The HC held that “indisputably, if the statutorily prescribed returns, GSTR-2 and GSTR-3 had been operationalised by the government, 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 further said that as a consequence, the deficiency in reporting the eligible input tax credit had resulted in excess payment.

Harpreet Singh, partner at KPMG, said it was no surprise that the revenue authorities had challenged the order. 

“It would be interesting to see what stand the apex court would take as the HC order had fully appreciated the facts and was well reasoned,” Singh said.

The central GST Act had provided for forms GSTR-1 (sales return), GSTR-2 (purchase return), and GSTR-3, which match sales and purchase details. With Forms 1 and 2 not operationalised, the government introduced Form-2A in October 2018 to avail of input tax credit and GSTR-3B to file summary returns.

In the absence of the GSTR-2A form at the time, Bharti Airtel contended that input tax credit details were submitted based on estimates and it noticed the under-reporting in October 2018. That is when it sought to revise its returns. 

The telco tried to correct the anomaly based on the government’s September 2017 circular, which allowed for reconciliation of any mismatch. However, in December 2017, the government issued a fresh circular barring entities from making rectifications.

Airtel had contended that the Centre instead introduced  GSTR-3B form, which required data to be filled in manually and does not permit data validation before it is uploaded. “The inability of the respondents to run their IT system according to the structure provided under the CGST Act cannot prejudice the rights of a registered person,” Airtel had argued.