The Calcutta High Court in the case of Kamdhenu Udyog (P.) Ltd. vs. Deputy Commissioner of Revenue vide Case No. WPA 9957 of 2025 dated 12.06.2025. reinforces that technical lapses like wrong period selection in Form GST DRC-03 should not deny relief, especially when no revenue loss or ITC utilization has occurred. Further, emphasised that natural justice and fairness require an opportunity to correct procedural defects when substantive compliance is evident.

Facts of the Case: In this case, the petitioner is engaged in the manufacture of poultry feed, which is non-taxable under the GST regime. However, they wrongly availed ITC by filing returns under Section 39 of the CGST Act. The Petitioner has never utilized the said ITC.

During scrutiny under Section 61, a notice in ASMT-10 was issued pointing out discrepancies. The petitioner had wrongly availed ITC, but later voluntarily reversed the same through Form GST DRC-03, as directed by the CGST Anti-Evasion wing.

However, due to an inadvertent error, the reversal was attributed to tax periods 2018-19 to 2021-22, though it actually included 2017-18 as well. Despite bringing this to the attention of authorities, a show cause notice was issued, and an order under Section 73 was passed on 27.12.2023, which was upheld in appeal under Section 107 on 21.03.2025. The Authorities held that reversal was not properly attributed to 2017–18 and therefore disallowed the claim.

Issue: Whether voluntary reversal of ITC for FY 2017–18 made through Form DRC-03, but wrongly attributed to later periods due to technical error, can be disallowed on that ground alone.

Held that: The Court found that the case involved no tax evasion, only a wrongful availment of ITC which was voluntarily reversed. The entire ITC amount had in fact been reversed, and this cannot be denied merely on account of a procedural error. The inadvertent error in the Form GST DRC-03 was in not selecting the correct tax period.

Further, the Court noted that both adjudicating and appellate authorities acknowledged the reversal, but denied relief on technical grounds, i.e., incorrect tax period selection in Form DRC-03.

Reliance placed upon the judgments in the case of Rajesh Real Estate Developers Pvt. Ltd. v. UOI  (Bombay High Court), Lotus Pharmaceuticals v. ASTO (Kerala High Court), Nivriya India Pvt. Ltd. v. ACST (Calcutta High Court), wherein it was held that such technical error can be corrected

The Court held that technical errors in DRC-03 can be corrected and should not result in denial of legitimate relief where the substantive reversal has been made. The orders dated 27.12.2023 under Section 73 and 21.03.2025 under Section 107 are set aside. The Matter was remanded to the adjudicating authority for fresh consideration, taking into account the voluntary ITC reversal, irrespective of the error in tax period selection. Also, Recovery notice dated 5.06.2025 under Section 79 is quashed. 

To read the complete judgment 2025 Taxo.online 1158