CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS v. M/S ABERDARE TECHNOLOGIES PRIVATE LIMITED

Factual and Procedural Background

This proceeding is a Special Leave Petition (Civil) Diary No. 6332/2025 filed by the Central Board of Indirect Taxes and Customs (CBIC) against the final judgment dated 29-07-2024 in Writ Petition No. 7912/2024 passed by the High Court of Judicature at Bombay. The Supreme Court (Coram: Hon’ble the Chief Justice and Hon’ble Mr. Justice Sanjay Kumar) heard the matter on 21-03-2025. An interlocutory application for condonation of delay in filing was also before the Court. Upon hearing counsel, the Court condoned the delay and declined to interfere with the High Court’s judgment, noting that there was no loss of revenue.

In the course of dismissing the SLP, the Court observed that the petitioner (CBIC) must re-examine the provisions and timelines for correcting bona fide errors. The Court’s observations addressed the impact of denial of input tax credit (ITC) to purchasers who have already paid tax, the permissibility of correcting clerical or arithmetical mistakes, and the inadequacy of software limitations as a justification to deny such corrections.

Legal Issues Presented

1. Whether the delay in filing the Special Leave Petition should be condoned.
2. Whether the Supreme Court should interfere with the impugned judgment of the Bombay High Court, particularly where there is no loss of revenue.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

• Condonation of delay: The Court allowed the application and condoned the delay in filing.
• No interference with the High Court judgment: The Court exercised its discretion to decline interference, stating that the impugned judgment is “just and fair” and emphasizing that there is no loss of revenue.
• Principled observations on corrections and ITC:
  • Purchaser not at fault: Where a purchaser has paid the tax, denial of the benefit of the tax paid results in the purchaser suffering and effectively making a double payment.
  • Human error is normal: Errors, including those by the Revenue, are commonplace. The right to correct mistakes of a clerical or arithmetical nature flows from the right to do business and should not be denied absent good justification.
  • Software limitations not a valid justification: Software is meant to ease compliance and can be configured; therefore, software limitations alone cannot justify denying correction of bona fide errors.
• Administrative direction: The Court directed the petitioner (CBIC) to re-examine the provisions and timelines fixed for correcting bona fide errors, noting that lapses are often realized only when ITC is denied to the purchaser.
• Precedential note: The Court remarked that the decisions of the High Courts in Bar Code India Limited and Yokohama India Private Limited, prima facie, do not lay down good law “in this regard,” and indicated that their ratio may be examined in another case.

Holding and Implications

Delay Condoned; Special Leave Petition Dismissed. The Court also ordered that pending applications, if any, stand disposed of.

Implications:

• Immediate effect: The Bombay High Court’s judgment remains undisturbed.
• Administrative impact: The CBIC is directed to re-examine provisions and timelines for correction of bona fide errors, with the Court underscoring that software constraints are not a valid basis to deny corrections and that purchasers should not bear double payment due to denial of ITC.
• Precedential scope: The Supreme Court’s remarks indicate that certain High Court views may be unsound prima facie, but the Court left the definitive examination of those ratios to a future case. No conclusive new precedent on that point was set in this order.