TaxTMI 
TaxTMI 
TaxTMI 
Due caution is required by the taxpayer while making payment of GST by electronic credit ledger as the applicable taxes such as IGST, CGST, SGST or UGST have to be paid appropriately. As this is a legal requirement, it is possible to make payment of GST by a taxpayer when IGST credit is also involved, in the most appropriate manner only by a knowledgeable person who is fully conversant with the legal requirements.
Nowadays, huge demands are being raised by way of issuance of show cause notices based on the mismatch between various GST Returns. Demand is also raised when IGST is paid in place of CGST and SGST or vice versa. The simplest solution to overcome these issues is close monitoring on case to case basis as to whether the applicable taxes are paid accurately before furnishing the annual return so that possible corrections may be carried out during filing the annual return.
Wherever applicable taxes are paid incorrectly, but the total demand payable under all heads are fully paid, the demand under section 73, 74 as well as 74A is not to be raised as there is no short payment of tax. The only issue is sharing of GST amongst Centre and State due to the above error, which is often inadvertent. Whenever the affected taxpayer approaches the jurisdictional officer or first appellate authority for remedy, the request is always turned down by quoting legal provisions.
One such affected taxpayer approached the Division Bench of the Kerala High Court. The court has examined this issue in depth and ruled that demand is not sustainable as Section 73 is not attracted when applicable taxes are paid in total, as it is for the GST authorities to resolve this issue either by allowing the taxpayer to amend the GST return so that error is rectified or by account adjustments amongst concerned Governments.
Though several jurisdictional high courts have already granted relief to taxpayers under similar circumstances by way of remand, in the case reported 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] the division bench on 26/11/2024 has passed the most appropriate order holding that demand is not sustainable.
For creating awareness amongst all concerned on this issue, the operative portion of the above judgement is reproduced below.
9. We find that on the facts in the instant case, the notice issued to the appellant, and the demand confirmed against him, were in proceedings initiated under Section 73 of the GST Act. The said provisions are attracted only when it appears to a proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax has been wrongly availed or utilised for any reason. The case before us clearly reveals that there has been no wrong availment of credit, and that the only mistake committed by the appellant was an inadvertent and technical one, where he had omitted to mention the
IGST figures separately in Form GSTR 3A. The mistake was also insignificant because it is not in dispute that there was no outward supply attracting IGST that was effected by him. We therefore set aside the impugned judgment of the learned Single Judge and allow the Writ Petition by quashing Ext.P14 order and declaring that the appellant shall not be seen as having availed excess credit for the purposes of initiating proceedings under Section 73 of the GST Act.
It is noteworthy to see that the decisions of High Courts are binding on all tax officials. While authorities based at Kerala are squarely covered under this judgement, officers in other state are also bound to act based on this verdict, so long as there is no order passed by their jurisdictional high court against the above ruling. Moreover, similar views are taken by various jurisdictional high courts during the last one year.
The same view was endorsed recently by the Keral High Court in W P ( C ) 5496 of 2024 in the matter of Ashok Drugs (Whole Sale) Vs. Deputy State Tax Officer and four others on 15/10/2025.
Interestingly, the view that tax is not attracted for head mismatch was also expressed by the Madras High Court on 06/10/2020 itself in WP 29676 0f 2019 in the matter of M/s. Sun Dye Chem Versus The Assistant Commissioner (ST), The Commissioner of State Tax - 2020 (11) TMI 108 - MADRAS HIGH COURT. The operative portion is also reproduced.
20. In the absence of an enabling mechanism, I am of the view that assessees should not be prejudiced from availing credit that they are otherwise legitimately entitled to. The error committed by the petitioner is an inadvertent human error and the petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute.
21. This writ petition is allowed and the impugned order set aside. The petitioner is permitted to re-submit the annexures to Form GSTR-3B with the correct distribution of credit between IGST, SGST and CGST within a period of four weeks from date of uploading of this order and the respondents shall take the same on file and enable the auto-population of the correct details in the GST portal. No costs.
Hence let us hope to get necessary relief in head mismatch cases in future as any adverse order on taxpayer is not going to benefit the revenue but increase their cost as they also are required to appear as respondents in the High Courts.