BJP said this has "exposed" the Congress as the "architect" of the "hate campaign" in the state.
In a surprise move, Congress nominated Shweta Bhatt, wife of Sanjeev Bhatt, who has taken on Modi, accusing him of complicity in the post-Godhra riots in 2002, to contest the Maninagar seat of the Chief Minister.
Both Modi and Bhatt today filed their papers before returning officer P K Jadeja.
BJP reacted sharply to Congress' decision to pit Shweta, a political greenhorn, against the party's potential prime ministerial candidate, with party spokesman Prakash Javadekar saying, "Congress is exposed thoroughly today.
Whatever Bhatt did in last 10 years, the whole architect, script writers and directors were the Congress."
"In the last 10 years, they carried out a hate campaign...They defamed Gujarat to the hilt. And Sanjiv Bhatt became a major pawn in the hands of Congress," he said.
"It was Congress-sponsored hate campaign to defame Gujarat and Gujarati voters (who) will definitely teach a bitter lesson to Congress," Javadekar said in Delhi.
"My fight is for truth, to establish democracy, please support me," Shweta told reporters after filing her papers.
Clearly realising the uphill task ahead of her she said, "It is not a fight between equals, I agree...but I am fully confident that I am going with a true heart to say the truth, so people will support me...I don't have false promises to make."
Modi had won the seat by a massive margin of 75,000 votes in the 2007 elections.
"I have chosen to fight because they had implicated my husband in a very bad way. Me and my family were struggling to overcome it. Then I realised, it was not only my family but many other families who were struggling," Shweta, who accompanied by her husband led a march of her supporters from Mahatma Gandhi Ashram before filing her papers, said.
Shweta rubbished BJP's charge that Bhatt was used as a "pawn" by the Congress and it was because of that she got party nomination.
"I had decided earlier that I will contest independently (against Modi)... but now the Congress has given me an opportunity so I am fighting on their ticket," she said.
Modi, who addressed an election meeting at Maninagar before filing his papers, however, chose to remain silent on Congress's decision to field Shweta Bhatt.
However, BJP secretary Kirit Somaiya made light of her candidature, saying, "This shows that no Congress worker is ready to stand against Narendra Modi. Who they (Congress) field is their internal matter, but even if the Prime Minister contests against Modi, it will be difficult for him to save his security deposit."
Sanjiv Bhatt, in an affidavit in the Supreme Court last year, had accused Modi of complicity in the 2002 riots in which over 1000 people, mostly Muslims were killed. He had also deposed against the Chief Minister before the Nanavati Commission, probing the riots.
Bhatt, who was the Principal, State Reserve Police Training School, was later suspended by the state government. He was recently charge-sheeted for murder in a custodial torture case by a court in Jamnagar district.