Correct. Clients not registered with HST should not be charging HST on their sales. They should pay it back to the customer if they did.
In Line 3A you report GROSS sales. That includes all applicable taxes including PST. On Line 3B you included both HST and PST. The result in 3C should be sales before any taxes. Because 3C is the amount that you get to keep and pay taxes on.
If they are not registered with HST, the HST on their expenses becomes part of the cost. You treat it on the T2125 as if it isn’t HST but cost. The reason you don’t take it out is that that specific HST is not refundable. It is not an ITC.