GSTR-1 Error Rectification Allowed, SCN Set Aside

Case Details: Hindustan Construction Company Ltd. vs. Union of India [2025] 181 taxmann.com 700 (Karnataka)

Judiciary and Counsel Details

S.R.Krishna Kumar, J.
Bharat B. Raichandani, Adv. for the Petitioner.
Prathibha, CGC and K. Hema Kumar, AGA for the Respondent.

Facts of the Case

The petitioner challenged a show cause notice (SCN) issued under Section 73 of the CGST Act. It was submitted that B2C supplies were inadvertently reported as B2B in GSTR-1. It was contended that the error had been identified and rectified, and that there was no loss of revenue as a result of the correction. The issuance of the SCN solely on the premise that such rectifications were impermissible was unjustified. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the mistakes were bona fide and inadvertent, and corrections made in GSTR-1 did not result in any loss to the revenue. The Court observed that the right to correct clerical or arithmetical mistakes flows from the right to conduct business, and that limitations in the GST software cannot curtail that right. Since the sole basis of the SCN was the impermissibility of rectifying such returns, the initiation of proceedings was unjustified. Consequently, the SCN and any subsequent proceedings were quashed, and it was directed to accept the corrected returns.

List of Cases Referred to

Orient Traders v. Deputy CCTes (Audit)-3, 4, DGSTO-3 [2023] 147 taxmann.com 83 (Karnataka) (para 4)
Wipro Limited India v. Asstt. Commissioner of Central Taxes [2023] 148 taxmann.com 216/97 GST 319/72 GSTL 325 (Karnataka) (para 5)
Aberdare Technologies Pvt. Ltd. v. Central Board of taxes and Customs [2024] 165 taxmann.com 325/105 GST 585/89 GSTL 6 (Bombay) (para 6)
Satyam Auto Components (P.) Ltd. v. Union of India [2024] 158 taxmann.com 360/82 GSTL 69 (Punjab & Haryana) (para 8)
Sun Dye Chem v. Asstt. Commissioner (ST) [2021] 124 taxmann.com 173/44 GSTL 358 (Madras) (para 8)
Star Engineers (I) (P.) Ltd. v. Union of India [2023] 157 taxmann.com 285/[2024] 102 GST 33/81 GSTL 460 (Bombay) (para 8)
Shiva Jyoti Construction v. Chairperson, Central Board of Excise & Customs [2023] 147 taxmann.com 511/96 GST 605/71 GSTL 120 (Orissa) (para 8)
Y. B. Constructions Pvt. Ltd. v. Union of India [2023] 148 taxmann.com 244/97 GST 342/72 GSTL 332 (Orissa) (para 8)
Abdul Mannan Khan v. GST Council [2023] 150 taxmann.com 203/98 GST 293/74 GSTL 182 (Calcutta) (para 8)
Pentacle Plant Machineries Pvt. Ltd. v. Office of the GST Council (2021) 52 G.S.T.L. 129 (Mad) (para 8).