HIGH COURT OF KERALA
REJIMON PADICKAPPARAMBIL ALEX
V.
UNION OF INDIA
WA NO. 54 OF 2024 NOVEMBER 26, 2024
The appellant received inward supplies of goods from both intra-state and inter-state sources for the assessment year 2017-18. For the inter-state inward supplies, IGST was paid by the supplier, and the appellant was required to claim ITC by correctly reflecting the IGST paid in Form GSTR-3B. However, due to an inadvertent error, the appellant did not show the IGST separately in GSTR-3B but instead bifurcated it as CGST and SGST. This led to a mismatch between Form GSTR-2A (showing IGST) and Form GSTR-3B (showing CGST/SGST). Despite no revenue loss to the department, the Assessing Authority treated the mismatch as excess utilization of credit and issued a notice demanding repayment of the CGST/SGST amounts. The proceedings culminated in Ext.P14 order, which was challenged by the appellant on the grounds that there was no actual excess credit availed.
Now the issue arises, whether the appellant's act of availing ITC of IGST under the heads of CGST and SGST, instead of IGST, can be treated as incorrect utilization of ITC leading to a demand for repayment, despite no revenue loss to the government?
The Hon’ble Kerela High Court Noted that, the issue pertained to the erroneous bifurcation of IGST as CGST and SGST rather than claiming it as IGST in Form GSTR-3B. Relying on an earlier decision by the Kerala High Court (Saji S. v. Commissioner of State GST), and an order passed by Shri Hareendran K, IRS, Assistant Commissioner, which dealt with an identical issue.
Directed the authorities to consider the refund application without deciding the legality of the order.
Observed that, the GST law allows for the utilization of IGST credit towards CGST and SGST liabilities as per Section 49(5) of the CGST Act. Further, the Central Board of Indirect Taxes and Customs (CBIC) Circular No. 192/04/2023 clarified that such errors in head allocation are revenue-neutral and do not result in a loss to the exchequer.
Held that, demanding repayment in such cases, where no ineligible credit was availed, was unsustainable. The appellant's actions were within the legal framework as the ITC had been validly availed, albeit under an incorrect head, and no further recovery was justified.
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