GSTR-3B is a return under GST Laws - Supreme Court

 

In an important decision, the Hon’ble Supreme Court (‘SC’) has held that GSTR-3B is a return under Goods and Services Tax (‘GST’) laws. The Apex Court overrules the decision of Gujarat High Court (‘HC’) which held that GSTR-3B is not a return under Section 39 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’).

 

Brief of the case

 

·                The SC, in the case of UOI v. AAP AND COMPANY, CA No. 5978/2021, has held that GSTR-3B is a return under GST Laws.

 

·                The Apex Court relied on the larger bench decision of Supreme Court in UOI v. Bharti Airtel Limited, (2021) 13 SCALE 301, to hold that the Gujarat HC decision in AAP AND COMPANY (supra) was specifically overruled.

 

·                In Bharti Airtel (supra) case, the Apex Court did not subscribe to the view that GSTR-3B is a temporary short gap arrangement. The Court observed that Rule 61(5) makes it clear that GSTR-3B is a return.

 

·                However, the SC in Bharti Airtel (supra) noted that the Constitutional validity of Rule 61(5) is not questioned.

 

 | Remarks

 

·                At the outset, in our humble view, the decision of Bharti Airtel (supra) cannot be considered a ratio decidendi on the present issue but was merely an obiter dictum. Thus, the SC may have heard the issue afresh.

 

·                Having said that, in our humble view, the Gujarat HC decision was may be incorrect basis the two fundamental principle in tax laws (1) Principle of redundancy (2) Principle that if tax collection machinery is prescribed and not absent at all, it must be given effect to and not curtailed.

 

·                If GSTR-3B is not considered a return u/s 39, then there can be no self-assessment, no SCN can be issued, no recovery can be made, no search can happen because these provisions are linked with filing of return and payment of tax (since due date for payment was linked with due date of return u/s 39).

 

·                Aftermath of this SC decision is, probably, the closure of all such writs where taxpayer claimed that no interest is payable because due date of return never arrived.