HC Allows Correction in GST DRC-03 | ITC Reversal Benefit Restored

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  • Last Updated on 29 June, 2025

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ITC reversal under GST

Case Details: Kamdhenu Udyog (P.) Ltd.. v. Deputy Commissioner of Revenue - [2025] 175 taxmann.com 684 (Calcutta)

Judiciary and Counsel Details

  • Raja Basu Chowdhury, J.
  • Ankit Kanodia, Ms Megha Agarwal, Piyush Khaitan & Ms Tulika Roy for the Petitioner.
  • Anirban Ray, Ld. GP, T. M. Siddiqui, Ld. AGP, Tanoy Chakraborty, Saptak Sanyal & Debraj Shaw for the Respondent.

Facts of the Case

The petitioner was engaged in the business of manufacturing poultry feed. During the tax period of July 2017 to March 2018, the petitioner wrongfully availed Input Tax Credit (ITC) while filing returns under Section 39 of the Central Goods and Services Tax (CGST) Act. However, the ITC was never utilised. Upon detection by the anti-evasion wing of the CGST authorities, the petitioner voluntarily reversed the wrongly availed ITC by filing Form GST DRC 03. Unfortunately, an inadvertent error was made in the DRC 03 form, where the tax period for the reversal was not correctly selected.

Despite the reversal, the authorities did not extend the benefit of the reversal, citing a technical error. The petitioner challenged the order issued by the adjudicating authority and the appellate authority that disallowed the reversal due to this error.

The petitioner argued that the reversal was voluntary and complete, and there was no misuse of ITC. Although the error in the DRC 03 form was acknowledged, the authorities did not allow the benefit of the reversal for the period 2017-2018, leading to the petitioner’s appeal. The petitioner also emphasised that the sale of poultry feed did not attract GST, thus no ITC could be claimed or utilised.

The respondent, representing the government, acknowledged that the ITC was wrongly availed but was reversed voluntarily by the petitioner. However, they maintained that the technical error in the form could not be corrected.

High Court Held

The Calcutta High Court held that the case was not one of tax evasion but a wrongful availment of ITC, which was voluntarily reversed. The Court found that the error in the DRC 03 form could be corrected and directed that the matter be remanded to the proper officer for re-adjudication, considering the reversal of ITC. The court also quashed the recovery notice issued under Section 79 of the CGST Act.

The court emphasized that inadvertent errors in the filing process should not lead to a denial of the reversal benefit, and such errors should be allowed to be corrected.

List of Cases Reviewed

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied