TaxTMI 
TaxTMI 
TaxTMI 
In a remarkable instance of judicial maturity and administrative recognition, the Kerala High Court, in REJIMON PADICKAPPARAMBIL ALEX VERSUS UNION OF INDIA, STATE OF KERALA, GOODS AND SERVICES TAX NETWORK, NEW DELHI, COMMISSIONER, OFFICE OF THE COMMISSIONER, STATE GOODS AND SERVICE THIRUVANANTHAPURAM, STATE TAX OFFICER ERNAKULAM. - 2024 (12) TMI 399 - KERALA HIGH COURT, delivered on 26 November 2024, highlighted by referring an order passed by a relatively lower-ranking official, Shri. Hareendran K., Assistant Commissioner of Central Tax, Bengaluru. This decision not only reinforces sound tax jurisprudence but also underscores the role of competent tax officers in delivering justice within the administrative framework.
The Core Dispute
The case arose from a technical error made by M/s Padiken Silks,(herein after to be referred as dealer) a GST-registered dealer, during the FY 2017–18. This error had happened in the very nascent stage of GST. Without appreciating the nuances of the new law and related procedures the dealer inadvertently availed Integrated GST (IGST) credit as bifurcated Central GST (CGST) and State GST (SGST) in their GSTR-3B form and showed IGST component as nil, even though the IGST credit was clearly available and reflected in GSTR-2A. The tax authorities viewed this as a “wrongful availment of credit” without appreciating the fact that GSTR-2A reflect an equal amount of IGST as credit and demanded reversal under Section 73 of the CGST Act, 2017. Following the SCN, the adjudicating authority faithfully confirmed the demand made in the SCN.
The dealer approached the Hon’ble High Court with a writ petition before a single bench. The learned Single Judge, who considered the matter noticed that the appellant had, by way of abundant caution, also sought a refund of the amounts demanded from him, from the credit that was available with the department consequent to the payment of IGST by the supplier outside the State. The learned Judge, therefore, merely directed the authorities to consider and pass orders on the refund application without actually pronouncing on the legality of the actions of the respondent.
Aggrieved dealer filed an appeal before the division bench submitting inter alia that the only mistake that was occasioned by the dealer was that he had not shown the IGST amounts separately in Form GSTR 3B against available credit and had resorted to an exercise of splitting the IGST amount towards CGST and SGST since he did not have any outward supply that attracted IGST. The advocate for the dealer produced a copy of adjudication order dated 14.12.2023 passed by Shri.Hareendran K, IRS, Assistant Commissioner of Central Tax, East Division-6, Bengaluru, which considered an identical issue regarding the availment of input tax credit as CGST and SGST instead of IGST. In the said case, the Assessing Authority had issued a notice alleging that there had been a wrong availment of input tax credit since the IGST amounts paid by the assessee, and in respect of which he ought to have taken credit as such, had not been shown separately as IGST but had been split by the assessee into the CGST and SGST components while taking credit.
The Hareendran’s Order: Substance Over Form
The High Court judgment extensively quoted the order dated 14 December 2023, passed by Assistant Commissioner Hareendran in a near-identical case (Para7). In that order, Hareendran recognized that:
“There is no dispute regarding the eligibility of the input tax credit… the allegation pertains to the Taxpayer erroneously availed the input tax credit under incorrect heads…”
He went on to note that as per Section 49(5) of the GST Act and CBIC Circular No. 192/04/2023-GST, credit in the electronic ledger is treated as a fungible pool unless it results in actual revenue loss. Since the credit was valid and the misclassification did not lead to any undue benefit or revenue leakage, the demand was dropped.
Judicial Recognition: A Bold and Appreciative Step
The Division Bench of Justices Dr. A.K. Jayasankaran Nambiar and K.V. Jayakumar not only relied on but also quoted the findings of Assistant Commissioner Hareendran verbatim in their judgment. The Court observed:
“…it not only represents the correct view of the procedural law… but more importantly, demonstrates that revenue officials, even at the level of Assistant Commissioner… are capable of rendering timely and effective justice in our country…”
The Court applauded this order as a “welcome breath of fresh air,” acknowledging that such administrative sagacity helps reduce litigation burden and infuse confidence in the tax system.
Key Takeaways
- Precedent from Below: The High Court’s gesture of quoting a junior officer’s adjudicatory order as authoritative reflects a progressive legal culture where merit, not hierarchy, determines credibility.
- Substantive Compliance Over Procedural Lapse: The verdict affirms that a mere misclassification without revenue loss does not warrant penal consequences under Section 73 of the CGST Act.
- Tribute to Revenue Officials: The Court’s praise for the Assistant Commissioner is a subtle but powerful message that encourages integrity, legal reasoning, and taxpayer-friendly approaches among field officers.
- Judicial-Administrative Harmony: This case exemplifies healthy alignment between judicial and administrative interpretations of law—key to ensuring consistency and justice in a complex tax regime like GST.
The citation and endorsement of Assistant Commissioner Harendra’s order by the Kerala High Court should be seen as a landmark moment in Indian tax administration. It sets a precedent where fair and well-reasoned decisions by grassroots officials can not only survive judicial scrutiny but can be elevated as benchmarks of good governance. In an environment where tax litigation is often prolonged and taxing (pun intended), such recognitions go a long way in reinforcing trust—both in the law and in its interpreters.
[Courtesy-Chat GPT]
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By
G. Jayaprakash
Advocate