2026 (3) TMI 1506 - HC - GST

GST rectification for bona fide filing errors allowed where credit remained traceable and revenue suffered no prejudice.

A purposive reading of GST return provisions allowed rectification of bona fide clerical or arithmetical mistakes in returns and invoice particulars, ... Entitlement to rectify the GST returns and corresponding invoice particulars for the relevant tax periods on account of bona fide inadvertent mistakes - Correction of GSTR-1 classification errors - Validity of show-cause notice and proceedings founded on non-acceptance of corrected returns. Correction of GSTR-1 classification errors - Show cause notice under Section 73 founded on refusal to recognise corrections - HELD THAT: - The Court held that the controversy stood covered by the decisions of this Court in Orient Traders [2023 (1) TMI 838 - KARNATAKA HIGH COURT] and Wipro Limited India [2023 (1) TMI 499 - KARNATAKA HIGH COURT] and by the view taken by the Bombay High Court in Aberdare Technologies Pvt. Ltd. [2024 (8) TMI 142 - BOMBAY HIGH COURT] which was also noticed as having been affirmed by the Apex Court. In the light of those decisions, bona fide correction of return particulars could not be denied merely because the assessee sought to amend the earlier disclosure. Since the sole basis of the impugned show cause notice was that the petitioner was not entitled to make the correction, that basis was unsustainable and the notice as well as consequential proceedings could not survive. [Paras 9] The impugned show cause notice and all further proceedings pursuant thereto were quashed, and the respondents were directed to accept the returns filed by the petitioner together with the necessary corrections and proceed in accordance with law. Final Conclusion: The writ petition was allowed. The Court quashed the show cause notice and consequential proceedings, and directed the respondents to accept the petitioner's corrected returns and proceed further in accordance with law. Issues: Whether the petitioner was entitled to rectify the GST returns and corresponding invoice particulars for the relevant tax periods on account of bona fide inadvertent mistakes, and whether the impugned show-cause notice and consequential proceedings were liable to be quashed.Analysis: The corrections arose from an inadvertent mismatch in the filing of GST returns during the first year of the GST regime, and the record showed that the tax credit was otherwise available and had only been reflected under the wrong head. The Court applied a purposive interpretation to the GST return provisions and held that bona fide clerical or arithmetical mistakes should not be defeated by a rigid reading of the time-limit provisions where no loss of revenue would result. It further found that the revenue itself had material to verify the actual transaction trail, and the proposed denial of credit was not justified on the facts. Reliance was placed on the line of authorities permitting rectification of bona fide errors where the correction does not prejudice the revenue or disrupt the credit chain.Conclusion: The petitioner was entitled to the requested rectification, and the impugned notice and all further proceedings based on it were not sustainable.