Gujarat HC: Clerical Error in GSTR-1 (Wrong Sister Concern Turnover) Can Be Rectified; Appellate Order Quashed

The Gujarat High Court has recently given relief to a petitioner by allowing rectification of a clerical error in GST returns, calling it a bona fide mistake, causing no revenue loss.

In the present case, the petitioner, M/s Sanghvi Metal Corporation, received a show cause notice dated 29.09.2023, worth Rs 40,32,390 from the GST Department, due to a difference in the outward supplies in Form GSTR-01 and outward supplies in Form GSTR-3B. The Tax authority stated that an excess Input Tax Credit (ITC) of Rs 21,136 and an ineligible ITC of Rs 5,118 were claimed by the petitioner.

The petitioner submitted a reply saying that the difference happened due to a clerical mistake during the initial implementation year of GST, where the turnover of its sister concern was mistakenly included in Form GSTR-1 of the petitioner. However, the tax authority still issued an order in original dated 20.12.2023 in Form GST DRC-07, demanding Rs 40,27,272 along with interest and a penalty.

The petitioner filed an appeal before the appellate authority. But the appeal was filed, as the petitioner, being a senior citizen, was not aware of technology and did not access email regularly. However, the appeal was dismissed solely on limitation grounds, without a hearing on the merits. Therefore, the Petitioner filed an application before the High Court of Gujarat requesting the court to allow the Petitioner to correct a clerical error made in Form GSTR-1.

The bench comprising Mr. Justice Bhargav D. Karia and Mr. Justice Pranav Trivedi observed the decision passed in Aberdate Technologies (P.) Ltd. v. Central Board of Indirect Taxes & Customs, reported in [2024] 165 Taxmann.com 325 (Bombay), where it was held that bona fide mistakes, where there is no loss of revenue, should be allowed to be corrected. The court observed that the petitioner had mistakenly declared the turnover of a sister concern in the Form GSTR-1, and such a mistake must be allowed to be corrected.

As a result, the court quashed the order dated 12.02.2025 and allowed the petitioner to file a rectified Form GSTR-1 within four weeks and directed the tax authority to accept and process the same within 12 weeks.