Facts of the Case:

In this case, the appellant was issued a show cause notice dated 18 December 2023 under Section 73 of the CGST Act on the ground that the IGST reported in GSTR-1 exceeded the IGST discharged through GSTR-3B. The alleged short payment of IGST amounted to ₹5,57,957. The appellant contended that the discrepancy arose from an inadvertent clerical error whereby the tax liability pertaining to IGST had been discharged under the CGST and SGST heads instead of the IGST head.

According to the appellant, the corresponding tax amount had already been deposited with the Government and there was no deliberate evasion or retention of tax. The adjudicating authority, however, rejected the explanation and confirmed the demand by order dated 15 April 2024. The first appellate authority also rejected the appeal by Order-in-Appeal dated 15 November 2025, holding that the appellant was required to pay IGST under the correct head and seek a refund of the amount paid under the incorrect heads. Aggrieved, the appellant approached the GST Appellate Tribunal.

Issue:

Whether payment of tax under the CGST and SGST heads instead of the IGST head, owing to a clerical error, amounted to non-payment or short payment of tax actionable under Section 73 of the CGST/KGST Acts. The Tribunal also examined whether the adjudicating authority could confirm the demand under Section 16(2)(a) when the show cause notice had alleged short payment on account of the failure to rectify the return discrepancy within the prescribed period. A further issue was whether the excess amount available under the CGST and SGST heads could be adjusted against the alleged IGST shortfall, and whether any residual liability would remain recoverable with applicable interest.

Held That:

The GSTAT held that payment of tax under the CGST and SGST heads instead of IGST, where the discrepancy arose from a clerical error and the tax had already been deposited with the Government, would not by itself amount to non-payment or short payment of tax warranting action under Section 73 of the CGST/KGST Acts. The Tribunal observed that the show cause notice alleged a short payment of IGST because the appellant had not rectified the discrepancy between GSTR-1 and GSTR-3B within the prescribed period. However, the original adjudication order rejected the appellant’s explanation by invoking Section 16(2)(a), which deals with the conditions for availing input tax credit. Since this provision had not been invoked in the show cause notice and operated on an entirely different footing, the Tribunal held that the demand had been confirmed on grounds not alleged in the notice. The original order was also deficient because it failed to properly analyse and answer the appellant’s submissions.

The Tribunal relied on the principles laid down by the Kerala High Court in Rejimon Padickapparambil Alex v. Union of India, W.A. No. 54 of 2024, dated 26 November 2024, which recognised the relevance of adjustment between tax heads in cases involving inadvertent technical errors. It also referred to the related line of decisions of the Kerala High Court, including Saji S. v. Commissioner of State GST, and subsequent decisions following the same principle. Applying the law laid down by the jurisdictional High Court, the Tribunal held that the excess amount available under the CGST and SGST accounts, arising from the appellant’s clerical mistake, was eligible to be set off against the shortfall in IGST liability.

The Tribunal nevertheless took note of the Revenue’s unrebutted reconciliation showing excess CGST and SGST payments aggregating to ₹5,42,907.92 against an IGST shortfall of ₹5,57,957.03. Accordingly, the amounts were not identical, and a difference of approximately ₹15,049 remained unpaid. The Tribunal directed that the excess amount under CGST and SGST be adjusted against the IGST shortfall through the electronic credit ledger, while any amount remaining due after such adjustment would be recoverable in cash along with applicable interest in accordance with law.

Consequently, the Tribunal set aside the impugned Order-in-Appeal and allowed the appeal subject to the above directions.

Key Takeaway

A bona fide clerical error in discharging IGST liability under the CGST and SGST heads does not, by itself, constitute non-payment or short payment of tax under Section 73, where the tax has already been deposited with the Government. The Tribunal permitted adjustment of the excess CGST/SGST balance against the IGST shortfall, following the law laid down by the Kerala High Court. However, the adjustment is limited to the amount actually available: any residual liability remains recoverable in cash with applicable interest. The decision also reiterates that an adjudicating authority cannot confirm a demand on a statutory ground that was not alleged in the show cause notice.

Case Name: SUNIL STEELS Vs The Commissioner of Keralam State GST, Thiruvananthapuram dated 08.10.2026