The Goods and Services Tax (“GST”) regime was introduced with the promise of a seamless, technology-driven tax system aimed at reducing cascading effects and ensuring smooth compliance. However, after seven years of its introduction, businesses and taxpayers have found themselves burdened with the rigidity of a tax regime, which makes the subsequent correction of even the smallest of clerical errors in returns quite difficult and requires litigation to have them rectified.
Despite the intended ease of compliance under GST laws, procedural inflexibilities and automated rejections have often left taxpayers with no option but to approach the High Courts and the Supreme Court for relief. Simple mistakes, such as a minor data entry error or a mismatch in ITC claims, often lead to blocked credits imposing significant financial strains and protracted legal battles for such taxpayers. The reluctance of tax authorities to adopt a practical approach and allow rectifications beyond the stipulated deadlines exacerbates the issue, which has forced taxpayers to approach the judiciary repeatedly even for routine corrections. Ideally, an efficient mechanism would have resolved simple corrections such as clerical errors, mismatched figures, or computational adjustments. However, bureaucratic inefficiencies and the lack of a streamlined process and inflexible software force taxpayers to seek judicial intervention. This not only clogs the judiciary with avoidable disputes but also contradicts the government’s promise of a taxpayer-friendly regime. Of late, multiple courts have taken a business-friendly stance, allowing rectification of such inadvertent errors by taxpayers.
The Hon’ble Supreme Court’s ruling in Aberdare Technologies
At the heart of any tax system lies the mechanism and procedure for tax computation, returns, filing, and availability of input tax credit (“ITC”). The provisions under the GST legislation mandate timely reporting of outward supplies,[1] inward supplies,[2] and monthly tax liabilities through the GST portal.[3] While the intent behind these provisions is to create a transparent and efficient tax ecosystem, the rigid timelines and technical constraints of the software often leave taxpayers struggling with unjust denial of ITC, even in case of inadvertent errors. This is primarily because the GST portal does not allow the rectification of GST returns filed by a taxpayer beyond November 30 of the next financial year or the actual date of furnishing of relevant annual return, whichever is earlier. Further, the GST portal imposes technical limitations for rectifying errors, often making it impossible for taxpayers to correct mistakes even when they are bona fide. This rigidity results in unfair tax liabilities that could cripple any taxpayer, more importantly, small and medium enterprises.
However, in its recent ruling, the Hon’ble Supreme Court has affirmed the Hon’ble Bombay High Court’s decision that allowed rectification of GST returns, beyond the software-imposed restrictions, marking a crucial shift towards a more equitable GST regime.
Upholding rights over technicalities
On July 29, 2024, the Hon’ble Bombay High Court had decided that taxpayers could amend or rectify their monthly statement of outward supplies.[4] While pleading before the Hon’ble High Court, the taxpayer argued that the proviso to Section 37 of the CGST Act should not to defeat the intention of the legislature, especially in cases of a bona fide and inadvertent error in furnishing particulars during the filing of returns, when there is no loss of revenue to the government. In holding so, it ruled against the GST Department, allowing taxpayers to correct unintentional errors without facing undue penalties or loss of ITC.
By allowing such rectification, the Court noted that any incorrect particulars would have a serious cascading effect, prejudicial to not only the assessee but also the third parties. The Court acknowledged that unlike the previous regimes, the GST regime was based “on the electronic domain”, and businesses with the limited expertise and resources were likely to make errors in filling the returns.
Reassurance to businesses
Aggrieved by the decision of the Hon’ble High Court, the GST Department approached the Hon’ble Supreme Court of India. In its landmark decision, the Hon’ble Supreme Court upheld this judgment of the Hon’ble High Court, holding that the right to correct clerical or arithmetical errors is one that flows from the right to do business.[5] The Apex Court’s recognition that software limitations could not justify the denial of ITC and double payment by the purchaser of the goods/services further emphasises that compliance systems should be designed to facilitate, not hinder, legitimate tax adjustments.
In delivering this judgment, the Hon’ble Supreme Court also took a critical stance against contrary High Court rulings, specifically those in Yokohama India (Hon’ble Telangana High Court)[6] and Bar Code (Hon’ble Punjab & Haryana High Court).[7] Both these judgments followed the Hon’ble Supreme Court’s earlier judgment in Bharti Airtel,[8] to hold that a taxpayer cannot rectify errors in the GST return beyond the statutorily prescribed period. By stating that these rulings do not lay down good law, the Apex Court has paved the way for a uniform, taxpayer-friendly approach to GST rectifications across jurisdictions. This ensures businesses are not subjected to inconsistent interpretations of law depending on the state in which they operate.
Legally, it echoes the precedent set in Suncraft Energy Private Limited,[9] where ITC was protected despite GSTR-2A/3B mismatches.
What this means for businesses
The crux of the Hon’ble Supreme Court’s reasoning is its recognition that human errors are an inevitable part of any compliance mechanism. This ruling will likely push the government to re-evaluate GST portal functionalities and introduce more flexible rectification mechanisms, ultimately easing compliance burdens.
By upholding the right to rectify GST returns, the judgment recognises the practicalities of business and the hurdles taxpayers face. Businesses will now have greater confidence in their ability to claim rightful tax benefits without being scared of errors. Hopefully, this ruling of the Hon’ble Apex Court should also discourage tax authorities from taking a rigid stance on compliance matters, leading to fewer disputes and litigation.
The Hon’ble Supreme Court’s observation that rectification timelines should be “realistic” is particularly crucial. The ruling emphasises that businesses should not be subjected to unreasonable constraints that effectively deny legitimate tax credits.
The counterpoint: A slippery slope?
The judgment could also open a Pandora’s box. If businesses are allowed to correct errors post-deadline without penalty, what stops deliberate manipulation under the guise of “bona fide mistakes”? The GST regime relies on self-assessment. In such a scenario, loosening deadlines might erode discipline and invite abuse. The Apex Court’s directive to the CBIC to revisit timelines may act as a double-edged sword: while it seeks flexibility, it leaves the door ajar for ambiguity until the introduction of clear guidelines so unscrupulous elements do not hold the system to hostage. The ruling’s silence on defining “clerical or arithmetical errors” further fuels this concern on the line between a typo and a tactical oversight.
Concluding thoughts
The decision is a crucial step towards a fairer, more business-friendly GST regime. It reinforces the principle substantive fairness should govern taxation, not rigid procedural formalities. By affirming that the ability to correct errors is intrinsic to the right to do business, the ruling discourages rigid interpretations of tax laws that lead to unjust tax burdens.
Very recently, the Hon’ble Gujarat High Court also quashed an order denying the refund of the integrated GST because of an inadvertent error on the part of the taxpayer. While seeking ITC refund, the taxpayer had missed including certain supplies made by it to a unit located in the special economic zone.[10] Further, the Hon’ble Delhi High Court had allowed the assessee to avail ITC, which the GST Department had disallowed because the supplier had made an inadvertent error in the invoice by specifying the assessee’s address and GST number of the Mumbai branch of instead of the Delhi branch.[11]
Taxpayers often find themselves burdened with the unnecessary hassle of approaching the Courts for even minor issues relating to the rectification of GST returns. A straightforward solution would be to incorporate a dedicated rectification tab in the website, allowing users to request corrections seamlessly. This would not only reduce litigation but also enhance taxpayer convenience, ensuring that the judiciary’s time is reserved for genuine disputes rather than avoidable procedural hurdles. For instance, the Union Budget for FY 2025–26 has recently introduced Section 18A in the Indian Customs Act, 1962, which allows voluntary revision of bill of entry, post clearance. However, voluntary revision under the Section 18A was restricted in situations such as ongoing proceedings initiated by an audit, search, seizure, or summons, or case requiring refund of duty due to reassessment by the customs officer.
We may expect such provisions to be introduced in the GST regime also. The government may use an automated AI-driven rectification system, which could either automatically detect errors in returns and suggest corrections before filing or identify such mismatches and errors and prompt the taxpayer to apply for rectification well within the stipulated timeframe. These measures would significantly enhance the efficiency of the GST regime and make compliance truly seamless and smooth for businesses.
In the long run, these judgments could spur necessary policy changes, including extending rectification timelines, improving the GST portal’s functionality, and ensuring that ITC claims are processed in a just and equitable manner. For taxpayers, these decisions are not just about rectifying past errors, they are also about securing a future where tax compliance is fair, transparent, and truly aligned with economic realities.
For further information, please contact:
S.R. Patnaik, Partner, Cyril Amarchand Mangaldas
sr.patnaik@cyrilshroff.com
[1] Section 37, Central Goods and Services Tax Act, 2017.
[2] Section 38, Central Goods and Services Tax Act, 2017.
[3] Section 39, Central Goods and Services Tax Act, 2017.
[4] Aberdare Technologies Pvt Ltd & Anr Versus Central Board Of Indirect Taxes & Customs & Ors, 2024 (8) TMI 142 – Bombay High Court.
[5] CBIC v. Aberdare Technologies Pvt Ltd, Special Leave Petition (Civil) Diary No. 6332/2025.
[6] Yokohama India Private Limited v. State of Telangana, (2023) 108 GSTR 115.
[7] Bar Code India Limited v. Union of India, (2024) SCC OnLine P&H 13853.
[8] Union Of India Versus Bharti Airtel Ltd. & Ors., 2021 (11) TMI 109 – Supreme Court.
[9] Assistant Commissioner Of State Tax, Ballygunge Charge & Ors. Vs. Suncraft Energy Private Limited & Ors – 2023 (12) TMI 739 – SC Order.
[10] ABN Industries vs. UOI & Ors., TS-183-HC(GUJ)-2025-GST.
[11] Braun Medical India Private Limited vs Union of India & Ors., TS-181-HC(DEL)-2025-GST.
