SC junks CBIC plea, says GST errors can be corrected even after deadline

In a significant judgment that could ease goods and services tax (GST) compliance for businesses, the Supreme Court has dismissed a special leave petition (SLP) by the Central Board of Indirect Taxes and Customs (CBIC), allowing companies to rectify clerical errors in tax filings even after the deadline provided there is no loss of revenue.

 

The apex court last week upheld the Bombay High Court’s judgment in favour of Aberdare Technologies Pvt Ltd, stating that human errors are normal and must not lead to denial of input tax credit (ITC). It ruled that “the right to correct mistakes in the nature of clerical or arithmetical errors flows from the right to do business and should not be denied unless there is a good justification”.

 

The Supreme Court further emphasised that denying ITC due to human errors results in unfair double taxation, where businesses end up paying tax twice. It also ruled that “software limitation itself cannot be a good justification, as software are meant to ease compliance and can be configured”.

 

Aberdare Technologies had filed its GST returns on time but later discovered clerical errors in December 2023. As per the Central Goods and Services Act, 2017, such errors could only be corrected until November 30 of every year. Since the deadline had passed, tax authorities rejected the company’s rectification request, citing strict legal timelines.

 

The High Court ruled in favour of the company, stating that there was no revenue loss and businesses should not be penalised for technical lapses. The court directed tax authorities to either open the GST portal for corrections or allow manual rectifications.

 

According to Sivakumar Ramjee, executive director-indirect tax, Nangia Andersen LLP, ITC denial due to clerical or technical errors in GST filings has long been a contentious issue between businesses and tax authorities.

 

“Tax authorities have been taking a rigid stance, often citing statutory limitations under Sections 37(3) and 39(9) of the CGST Act, which prescribe time limits for rectifying errors in GST filings. This has resulted in genuine claims being disallowed, leading to prolonged litigation and uncertainty for businesses — basically, an accountant’s worst nightmare,” Ramjee said.

 

Tax experts believe the ruling strengthens the ability of businesses to challenge unjust credit denials. "By upholding the correction of bona fide GST errors — especially where no revenue loss occurs — the court has reinforced the principle that compliance should be practical, not punitive. The decision brings much tax certainty and protection of taxpayer rights in bona fide cases,” said Saurabh Agarwal, tax partner at EY India.

 

Harpreet Singh, partner-indirect tax at Deloitte, said: “With technology being the cornerstone for undertaking tax compliances, such positive rulings increase the confidence of taxpayers in adopting the latest technology tools that can ease their overall compliance burden.”