GSTN COMMON PORTAL: E-GOVERNANCE

Digitisation of tax administration has been a progressive step of the Government in the recent past. Understandably, the primary thrust for it came from increasing tax complexities and allegedly evasive measures adopted by business enterprises. This warranted Governments to arrest such activities through real-time and non-erasable trails of events. Now, tax administrations are increasingly harnessing the benefits of digitisation by instant identification, examination and conclusion of tax challenges.

Therefore, a robust IT infrastructure was the key to the success of the implementation of a ‘self-policing’ GST in India. The need for such infrastructure led to the birth of the GST Network (GSTN) which was entrusted with the responsibility of setting up, operating and the maintenance of IT systems. GSTN was established as a special purpose vehicle by the Ministry of Finance to provide common IT infrastructure, systems and services to the Central and State Governments, taxpayers and other stakeholders for supporting the implementation and administration of the GST in India.

Much like the GST scheme, the GST Network has also been subjected to critiques. Firstly, the structure and functioning of the GSTN with the possibility of interference by non-governmental bodies, and secondly, the privacy concerns emerging from such large-scale collection of data. That apart, the GSTN has been entrusted to operate the GST common portal under the domain and boundaries of the GST law.

LEGAL BACKGROUND
Section 146 of the CGST / SGST Act, 2017 empowers the Government to notify a common electronic portal for facilitating registration, tax payments, furnishing of returns, computation / settlement of integrated tax, electronic way-bill and such other functions as may be necessary. Notification No. 4/2017-CT dated 19th June, 2017 notified www.gst.gov.in (the website managed by GSTN) as the common portal for the purpose of facilitating ‘registration, payment of tax, furnishing of returns and computation and settlement of integrated tax’. On the GST portal, the website states that the said portal includes all its sub-domains, internal and external services serviced by the domain and mobile applications of the GST portal. Similarly, Notification No. 9/2018-CT dated 23rd January, 2018 has notified www.ewaybillgst.gov.in as the Common Goods and Services Tax Electronic Portal for furnishing of electronic way-bill.

Recently, Notification No. 69/2019-CT dated 13th December, 2019 notified www.einvoice1-10.gov.in as the portal for e-invoice preparation. Parallel Notifications were issued by States for recognising the said web-portal(s) for specific purposes. Through such provisions, legal sanctity was sought to be provided to the said portal(s) but only for limited functions as specified in the Notifications. Interestingly, transition returns, refund applications and appeals do not find mention in the enabling Notifications notifying the common portal for specific purposes and one may resort to this as a legal contention in the days to come.

LEGAL QUESTIONS
Some critical questions arising from the e-governance initiatives of the Government are:
(a) What is the scope of the common portal in administration of the law?
(b) Whether the Notification issued under the CGST / SGST on the common portal would apply to the IGST Act even though a Notification has not been issued for this purpose?
(c) Whether the frameworks / contents, conditions, restrictions in the portal are backed by legal provisions? Is the Government imposing its view of the law on the taxpayer? Are there any remedies left to the taxpayer where the GST portal does not permit one to apply the law in a particular manner?
(d) What are the consequences of a failure in the GSTN systems, especially on down-time, lack of proper response, etc.? Whether the ‘proper officer’ can cite helplessness in matters of substantive rights where the portals restrict functionalities? What is the legal sanctity of the response / lack of response of GSTN helpdesks?

SETTLED PRINCIPLES
Before going into details, it may be important to assimilate the critical concepts of law which would govern the above questions. The first one is the well-settled provision that delegated authorities would have to operate within the framework of law and the legislations or actions are subject to the vires of the governing statute. This reminds one of the decision of the Supreme Court in St. Johns Teachers Training Institute vs. Regional Director, NCTE (2003) 3 SCC 321 at page 331 which held that regulations and rules are directed towards ‘supplementing’ the law rather than ‘supplanting’ the law. The Court stated as follows: ‘What is permitted is the delegation of ancillary or subordinate legislative functions, or, what is fictionally called, a power to fill up details.’

The other principle is that ‘forms / returns’ forming part of a statute cannot drive its interpretation1. The Supreme Court in the context of adjustment of MAT credit referred to the forms and held in CIT vs. Tulsyan NEC Ltd. (330 ITR 226) as follows: ‘It is immaterial that the relevant form prescribed under the Income-tax Rules, at the relevant time (i.e., before 1st April, 2007), provided for set-off of MAT credit balance against the amount of tax plus interest, i.e., after the computation of interest under section 234-B. This was directly contrary to a plain reading of section 115-JAA(4). Further, a form prescribed under the Rules can never have any effect on the interpretation or operation of the parent statute.’

And finally, procedural laws are meant to further the object of the substantive provisions and not restrict their scope [CCE vs. Home Ashok Leyland (2007) 4 SCC 51].

RELATIONSHIP BETWEEN GSTN AND GOVERNMENT OF INDIA
GSTN was incorporated on 28th March, 2013 for the purpose of implanting e-governance and technology initiatives for the efficient rollout of the GST law. As per media reports, it can be inferred that work on the creation of the IT infrastructure commenced much before the passage of the Constitution (One Hundred and First Amendment) Act, 2016. It was during the 4th GST meeting on 3rd-4th November, 2016 that GSTN made a presentation about the status of the web development and the services being offered by GSTN on this front.

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1 LIC vs. Escorts Ltd. (1986) 1 SCC 264

Interestingly, the statute does not enlist the criteria for selection, operation and regulation of an IT service provider (whether Government-owned or otherwise). The GST Council in its minutes also does not formally identify / appoint the GSTN as the sole service provider for this massive task. This question is important because the 11th meeting had specifically approved a proposal of appointing GSTN for the development of the e-way bill IT infrastructure but the appointment of GSTN for the basic GST portal seems to be missing in the minutes. The legal sanctity of entrusting / delegating the IT infrastructure to GSTN through the Government of India is unclear from public domain documents and requires immediate attention.

ANALYSIS
Compliance under the erstwhile laws under Excise, Service Tax, VAT, Entry Tax was largely performed electronically. It was thus expected that the reporting and compliance under the GST law would also continue to be driven by technology. However, the level of technological complexities was relatively lower under those laws. The electronic forms under the erstwhile laws had limited functionalities and were meant for the limited purpose of capturing data. The administration then utilised the data collected at the back-end for risk management purposes.

However, the GST portal ushered in a much higher level of legal control at the data entry point itself by the taxpayers and in many instances hindered the decision-making of the taxpayer. Although the insertion of legal control might have been intended to assist taxpayers in accurate data capture, in certain cases it appears to have breached the legal framework. For a start, we should read this disclaimer of the GSTN portal for its users:

‘Though all efforts have been made to ensure the accuracy and currency of the content on this website, the same should not be construed as a statement of law or used for any legal purposes or otherwise. GSTN hereby expressly disowns and repudiates any claims or liabilities (including but not limited to any third party claim or liability, of any nature, whatsoever) in relation to the accuracy, completeness, usefulness and real-time of any information and contents available at this website, and against any intended purposes (of any kind whatsoever) by use thereof, by the user/s (whether used by user/s directly or indirectly). Users are advised to verify / check any information and contents, with the relevant Government department(s) and / or other source(s) and to obtain any appropriate professional advice before acting thereon as may be provided, from time to time, in the website.’

Thus, the GSTN portal clearly disclaims its responsibility over administering the law and states that the web functionality does not represent the interpretation of law. In fact, the portal also does not claim responsibility over the accuracy of the contents which are uploaded on it and has directed taxpayers to either approach Government officials or seek professional advice.

DAWN OF THE PORTAL
The e-governance initiative under GST commenced with the migration of registration(s) of erstwhile taxpayers into the GST regime. This involved the filling of Form REG-26 which contained checks and balances in terms of back-end validation of PAN numbers, legacy registration numbers, bank accounts, etc. This is usually done to sanitise the data at the entry point so that redundancies can be avoided. As time passed, additional functionalities were introduced on the GSTN portal. The most critically discussed of these were related to the returns in GSTR1, GSTR2, GSTR3 and their ancillary forms. Though these forms were notified in law, due to various reasons including lack of technical preparedness of the GSTN, the alternative summary form in GSTR3B was introduced. Subsequently, additional modules on transition returns, refunds, input tax credit (ITC), etc., were introduced in a phased manner. The transition module has been widely debated in legal forums since it directly impacted the eligibility of taxpayers to claim the said credit. Technical glitches in the form, lack of clarity in the transition module, coupled with the complexity of the user tabs, made the form difficult to comprehend for taxpayers resulting in non-availment of credit.

In September, 2019 the refund module was launched envisaging electronic processing of refund from application to disbursement. There have been instances where taxpayer refunds have been delayed due to internal technical glitches in the refund disbursement process and its interaction with other external databases (such as PFMS). Recently, the portal has enabled the functionality of appeals (including advance rulings) in respect of refunds, registrations, etc. The portal is progressively digitising the inter-face between the administration and taxpayers.

In the effort to digitise the process, internal controls / checkpoints have been placed at the point of data entry itself which may hinder even genuine cases. The GSTN assumes that taxpayers have uploaded accurate data at all entry points in the manner expected by the portal. Taxpayers in many cases have failed to understand the data expectations due to lack of technical guidance material or ineffective helpdesk support from the GSTN, thus resulting in incorrect data entry. Moreover, the portal has been developed based on the administration’s perspective / interpretation of law which may or may not be accurate. In an era of self-assessment (in contradistinction to officer-assessment), taxpayers should be granted the liberty to apply the law as per their own understanding without any technical hindrances. The vires of taxing statutes have been tested multiple times in higher forums and reading down or striking down of legal provisions is not unknown. With several technical restrictions (enlisted below), taxpayers have been thrust with the administration’s view of law.

The ensuing paragraphs are an attempt to list the technical challenges in the portal which appear to be either contradictory to law or hamper a taxpayer’s right to perform a self-assessment of his taxes based on his interpretation. The important pointers under each module are herewith tabulated2:

Return module

Table Ref.	Functionality	Comments
GSTR1: Aggregate turnover	Data filed auto-populated used for various threshold limits such as E-invoice, etc.	The functionalities use turnover for enabling facilities of e-invoicing, etc. This causes issues where taxpayers might have reported an incorrect turnover in the previous year(s) which may have been rectified in annual returns / left unrectified. The system merely aggregates the turnover and adopts this as the basis for enabling / disabling features
GSTR1: Date of invoice and invoice No.	Date of invoice cannot be before date of registration	A taxable person who has availed GST registration belatedly is barred from reporting the original tax invoice even though taxes may have been charged / paid in the said invoice to the recipient
GSTR1: B2C and B2B	Amendment from B2C to B2B	One may view section 39(7) as being a time limit only to rectify any particulars which have an impact on the tax liability. In cases where the particulars do not have any tax liability such as this, the time limit provisions should not apply, but the portal restricts such revisions
GSTR1 : SEZ	SEZ supplies liable for CGST / SGST	Certain advance rulings have stated that restaurant services are liable to CGST / SGST and not IGST. Return functionalities do not permit CGST / SGST for SEZ invoices
GSTR1 : B2CL	Amendment in B2CL invoices	B2C large invoices (in excess of Rs. 2.5 lakhs) are entered at an invoice level but amendment tables in GSTR1 do not provide any functionality to update the GSTIN of these invoices and shift them to the B2B section – taxpayers are forced to raise credit notes to the B2CL data and upload fresh invoices in the B2B section
GSTR1 – DNs / CNs	Linking DNs / CNs with multiple invoices	Until recently, DNs / CNs were mandatorily required to be linked to a single invoice. The law has been amended making the linking an open-ended feature. The GSTN portal has only recently opened this feature by de-linking the mapping of DNs / CNs with a single invoice. Till now, taxpayer(s) were unable to upload this data
GSTR1 – Export details	Alterations in type of exports	Alteration in invoices from ‘with payment’ to ‘without payment’ is not permissible which causes disabilities in other refund functionalities
GSTR3B: Taxable turnover	Negative turnover is not permissible	In cases where the credit note raised in a tax period exceeds the output turnover, the data field does not permit negative values. CBEC Circular / Helpdesk suggest that the unadjusted credit notes are to be reported in subsequent months. Moreover, due to zero-values being reported in GSTR3B, there arises a variance between GSTR1 and GSTR3B and disables certain other functionalities in other modules (such as refunds, etc.)
GSTR3B – ITC	ITC order of set-off	GSTR3B mandatorily requires the ITC to be utilised prior to making cash payments or performing inter-head set-offs. Taxpayers may choose to avail ITC and refrain from utilising the same on the grounds of ambiguity. But the utilisation is thrust upon them, consequently opening the scope for incorrect utilisation
GSTR9 – Table 9	Details of tax paid	Annual return auto-populates details of taxes paid in a non-editable format in GSTR9. Taxpayers who have paid taxes
GSTR9 – Table 9   (continued)	Details of tax paid	through DRC 03, etc., and have included the turnover in annual return would not be able to record this tax payment, resulting in glaring discrepancies
GSTR9 – Table 6	Details of input tax availed	Annual return permits reversal of ITC and accordingly directs filing of DRC 03 for such reversals but the reverse is not permissible. Taxpayers are not permitted to avail ITC through the annual return. In the absence of a clear GSTR1, 2 and 3 and a stop-gap GSTR3B, taxpayers have looked at GSTR9 as the only final return to report the tax credits / liabilities. The law neither specifies the document of availing credit nor bars claim of credit through GSTR9. Yet, the functionality in the tax portal does not permit availing of such ITC in the electronic credit ledger through GSTR9
GSTR9	Table 8 – GSTR2A	Details auto-populated in Table 8 representing input invoices uploaded by suppliers does not reconcile with the taxpayers’ GSTR2A. Until 2018-19, the taxpayers were not provided with item-wise listing of such auto-population and in many cases taxpayers were forced to file the document as it was auto-populated
GSTR9	Table 9 – Auto population	Form GSTR9 keeps the data fields for this table open to alteration by the taxpayer but the portal freezes the tax payment details through ITC and / or cash
GSTR1/9	Exempt supplies / HSN tables	The exempt supplies / HSN tables are static and not open to alteration. Without the functionality, the taxpayers would be faced with questioning on classification even though it may not be admittance by taxpayer in its strict sense
GSTR1/3B/9	Unfructified supplies	Taxpayers may have situations where supplies are rejected by the recipient at the doorstep. Though the law provides for cancellation of invoice, once the invoice is uploaded on the GSTR1 the portal does not have any feature to mark a particular invoice as cancelled, forcing the taxpayer to raise credit notes which is itself not permissible under law

GSTR2A & 2B module

Table Ref.	Functionality	Comments
GSTR2B	ITC not available summary	The form provides an ‘advisory’ that invoices which do not meet the conditions of section 16(4), or the place of supply is different from the location of the recipient, should not be eligible for credit. The criterion of place of supply does not seem to emerge from any specific provision
GSTR2A / 2B time limit	Delayed reporting of invoice by counter-party	GSTR2A/ 2B mark credit which is belatedly reported as ineligible even though the supplier would have reported taxes appropriately and complied with section 16 in its entirety, e.g., alteration of an invoice from B2C table to B2B table involving updation of GSTINs
GSTR2A / 2B	DTA clearance by SEZ	Bill of entry filed by DTA on procurement of goods by an SEZ does not appear in the GSTR2B. This throws up red flags while filing GSTR3B as this data is not auto-populated in the said form

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2 The tables are illustrative and not exhaustive – over the period GSTN has gradually addressed many such challenges

Adjudication modules

Table Ref.	Functionality	Comments
GST APL-01	Disputed tax	Taxes which are reported through DRC 03 challan are reported as ‘admitted tax’ even though the tax payments are made under protest to avoid the interest / penal consequences. While filing the appeal, the online module directs an additional 10% to be paid as pre-deposit towards disputed liability. Effectively, the taxpayers are required to pay 110% of the tax demanded for filing the appeal online

Job work module

Table Ref.	Functionality	Comments
ITC-04	Unit of measurement (UOM)	The form raised red flags where the UOM of outward movement towards job work is different from inward movement from job worker. The form does not appreciate that job work activity can result in complete transformation of inputs resulting in difference in UOMs. The portal attempts to map the outward dispatches with inward receipts at the same UOM

Refund modules

Table Ref.	Functionality	Comments
RFD-01	Sequential filing	RFD-01 are mandatorily required to be filed sequentially forcing the taxpayer to file Nil refund applications even though he / she may want to come back and file a refund for past period (of course within the time limit)
RFD-01	Export turnover	Incorrect reporting of export turnover in other tables (such as B2B, etc.) of GSTR3B / GSTR1 is not reflected in the refund form resulting in incorrect application of refund formula
RFD-01	Lower of three figures	RFD-01 restricts refunds to the lower of (a) input tax credit at the end of the tax period; (b) refund as on date of application; and (c) input tax credit as per formula. The refund module is not reflective of the law as it restricts refund of ITC based on the balance as at the end of the tax period. Taxpayers who have accumulated ITC after the relevant tax period would still be restricted to the ITC as at the end of the tax period
RFD-01	Input tax credit	Taxpayers may have reversed ITC pertaining to past periods while filing GSTR3B. Though prior period reversals are not relevant for refund computations, the online form auto-populates the net figure from GSTR3B, causing a deviation from the statutory formula

E-way bill modules

Table Ref.	Functionality	Comments
EWB-01	Validity of E-way bill	The E-way bill portal calculates the validity automatically based on the PIN codes specified by the taxpayer. It is quite possible that transporters adopt a route of their choice depending on accessibility, convenience, etc. To freeze the validity based on pin codes from external third party data is not specified under law
EWB-01	Back-end validation of vehicle numbers	E-way bill portal performs a back-end validation of the vehicle numbers with the government-approved ‘vaahan’ website. Inefficiencies in those websites also creep into the GST system as the E-way bill portal raises red flags for a vehicle number not visible in the ‘vaahan’ website

JUDICIAL PRECEDENCE UNDER GST

The prominence of law over forms and procedures has been the hallmark of even recent decisions under GST. The Delhi High Court in Bharti Airtel Limited vs. UOI [2020 (5) TMI 169] examined the plea of the taxpayer who was restricted from rectifying the returns for a particular tax period and was directed by a CBEC Circular to rectify only in subsequent tax periods. The Court examined the limitations of the GSTN portal and held that the taxpayer had a right to rectify the very same return and claim refund of the excess taxes paid for the tax period under consideration. The Madras High Court in Sun Dyechem vs. CST 2020 TIOL-1858-HC-MAD-GST held that incorrect reporting of tax type by the supplier cannot be left unamended as it would hamper the tax credits at the customer’s end. The Court directed the jurisdictional officer to make amendments in supplier’s GSTR1 so that the correct tax type is reflected in the customer portal, thus undermining the influence of the portal over equity and law.

In another case, the Delhi High Court in Brand Equity Treaties Limited vs. UOI [2020 (5) TMI 171] recognised that technical glitches should be granted a wider scope to include even challenges faced at the taxpayer’s end (such as lack of internet connectivity, IT infrastructure, etc.). In the context of Transition Credit, Courts in many instances (such as Tara Exports [2020 (7) TMI 443]) have permitted manual filing of Tran-1 forms to avail the tax credit as an alternative to filing the same on the online portal. These decisions affirm the settled proposition that procedural laws are meant to further the substantive rights acquired under law.

However, one must also not lose sight of the decision of NELCO vs. UOI [2020 (3) TMI 1087] wherein the Bombay High Court upheld the vires of the rule defining technical glitches as being those arising at the GSTN end and cannot be interpreted to cover those difficulties prevailing at the taxpayer’s end. The Madhya Pradesh High Court in Shri Shyam Baba Edible Oils vs. CC 2020-VIL-567-MP held that the procedure prescribed in law should be strictly followed. Where the law prescribes SCNs, orders, etc., which are to be communicated through the common portal, they should necessarily be communicated only through the common portal. These decisions uphold the importance of the common portal and imply that taxpayers should take necessary steps to equip themselves with the technological upgradations warranted under the new law.

Let us now take up the question whether the GSTN portal can be described as a portal to report the numbers of the taxpayer or can be it designed to administer the law by placing checks and balances at the data entry point itself, thereby curbing the right of the taxpayer to self-assess its taxes. Going by the propositions laid down above, the portal cannot place fetters on the taxpayer’s right to fill up data as per its computation and should not be driven by pre-filled data points contained in the GST portal. Moreover, even where the data is auto-populated, the taxpayers should be granted the right to alter the auto-population and place their self-assessed values. The tax administration can without doubt examine the data at the back-end and seek clarifications to the alteration of the data plugged into the form, but that should be performed through a due process of adjudication or assessment. A website-driven automated assessment is not warranted under the GST law. Therefore, the GSTN portal should refrain from being a legislative or administrative tool and rather restrict itself to being a repository of information of all taxpayers.

A second question is to examine whether the enabling Notifications under the CGST / SGST Act of identifying the GSTN portal as a common portal would apply to the IGST Act as well. Whether separate Notifications are required to be issued under the IGST Act empowering the GSTN portal to operate as a common portal for all purposes of the IGST Act? Going by the implication of the phrase mutatis mutandis3 in section 20 of the IGST Act which links it to the CGST Act, the rules, notifications, including the prescription of the common portal, would apply equally to the IGST Act as well. The entire chapter of ‘Miscellaneous provisions’ under the CGST Act has been made applicable to the IGST Act and consequently the common portal notified in terms of section 146 of the CGST Act falling under this chapter would be operative for the IGST Act as well.

A third question, on the vires of the restrictions / controls placed in the GSTN portal, has been discussed above. The forms are aimed at capturing the self-assessed data of the taxpayers and not to regulate the taxpayer itself. The restrictions are questionable and even where the common portal is the primary forum for making necessary applications, the Court has devised an alternative approach of manual filing of the applications. The taxpayer ought to have a fit case for seeking this alternative remedy of filing manual applications. The taxpayers could face hurdles subsequently in enabling the functionalities of refund, reflection in electronic credit ledgers, etc., and hence should use this as a measure of last resort only.

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3 (1983) 2 SCC 82 Ashok Service Centre vs. State of Orissa

Coming to a fourth, crucial question, proper officers have been the ‘go-to persons’ for taxpayers in case of technical difficulties. But the situation here is such that proper officers are neither equipped with legal nor technological powers and therefore claim helplessness. Taxpayers run from pillar to post between the GSTN helpdesk and the proper officer. In many cases the helpdesk directs taxpayers to reach out to the proper officer for technical snags. Without any specific direction from the Board, taxpayers are unable to enforce their right to receive a resolution to their technical problems from the proper officer. In certain cases, helpdesks also provide solutions without legal backing (for example, in one case a helpdesk directed the taxpayer to apply for cancellation and seek fresh registration due to a technical snag). The helpdesks are not proper officers under law and have no authority to decide on legal matters and it is imperative for the administration to issue binding guidelines to the field formations to accept the technical queries, seek speedy resolution at the back-end from the helpdesk and respond to the taxpayer with a solution. Until then, the taxpayers would be left on their own to comply with the law and then offer extensive explanations at the time of audits / assessments on what had transpired at the time of filing the applications on the portal and the reason for plugging the numbers as it stood therein.

In conclusion, the helpdesk does not have any legal authority to resolve taxpayer grievances and the proper officers should be directed through appropriate administrative instructions to take up these matters.

The authority to design, operate and regulate the IT infrastructure is open to questioning as the Legislature has not empowered the Government(s) or their Boards to direct the creation or regulation of the website. The involvement of GSTN as a separate entity appears to be on a questionable foundation and open to examination. Until then, taxpayers should make earnest efforts to reconcile themselves to the portal requirements and record the deviations from the data expectations suitably to enforce their legal rights of a self-assessment rather than a portal-assessment at higher forums.