TaxTMI 
TaxTMI 
Even though there are several issues on which the GST Council with their inherent powers may easily resolve, litigation is increasing day by day by making rich only the tax professionals whereas the GST Officer who passes that order, the taxpayer as well as the precious time of the jurisdictional high court are all at a loss. The officer has to pass one more order granting full relief to the taxpayer. The taxpayer, though gets relief, it is only at a cost whereas it has to be free. The precious time of learned high court judges are spent on unproductive issues due to the erroneous order being passed by the GST officer.
This article is devoted to the issue of tax head mismatch. During the initial three years up to 2019-2020, the awareness on this issue was less on the taxpayers who have inadvertently used IGST as CGST + SGST or vice versa. This does not result in short payment of GST at all as required taxes are fully paid but under a wrong head. The one and only objection of the GST department is that State Revenue has gone to Centre or vice versa due to the error of the taxpayer and the taxpayer must repay the tax and apply for refund. This aspect was examined at length by the division bench of the Kerala High Court on 26/11/2024 itself as 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 operative portion reads as '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.
Before parting with this case and taking note of the anxiety and apprehension of the learned Government Pleader, that the State might be deprived of its legitimate share of the IGST paid by the suppliers outside the State in the instant case, we make it clear that on the respondent State producing a copy of this judgment, along with a representation before the GST Council, the GST Council shall issue necessary directions to resolve the issue by taking note of the declaration in this judgment'.
It is pertinent to distinguish between the orders which create a binding nature on all the lower authorities and others. In general, the High courts do not go to the facts of the case and allow the writs in the most appropriate cases by simple remand without any final verdict. However, these cases are not of binding nature as no final decision on the taxability or otherwise was decided by the high court. In contrast, in the above case, the final decision was arrived whereby the taxpayer was waived from all the demand by the high court order and the order passed by the GST officer was set aside.
Despite the above position, a matter on identical issue reached the same high court on 19/05/2026 in WP (C) 30190 of 2025 [Moothaveettil Elvana Ramesh Kumar Versus Union of India, Through Its Secretary (Revenue), Ministry Of Finance, Department Of Revenue, Government Of India, New Delhi, State of Kerala, Goods And Services Tax Network, State Tax Officer, Kozhikode - 2026 (7) TMI 438 - KERALA HIGH COURT] wherein the high court relying on the decision of the division bench as referred above held that ' However, it is clarified that, the respondent State may move the GST Council, in the light of the principles laid down in Ext.P4, to get the issue regarding the settlement of the amounts between the Departments resolved'.
Let us conclude here by requesting the GST Council to resolve this issue by making suitable suggestions to the Central Government on the required amendments to ensure that all cases including the cases presently under SCN, OIO, OIA or at GSTAT may be resolved by way of a single decision of the GST Council. It is also suggested that all the States may simply share the cases pertaining to their state on all the cases with complete details with center so that all the state data may be consolidated and one single back end operation may ensure each one get their respective share in the most appropriate manner.
This is all the more important to minimize the avoidable litigation. It may not be out of place to mention here that I have a live case wherein a client of mine, situated in Tamil Nadu has paid IGST of 8,00,000 as CGST + SGST of 4,00,000 each due to inadvertent error during initial years. However, there was another incident wherein the same taxpayer has paid CGST + SGST of 3,00,000 each as against the IGST amount to be paid of 6,00,000 (figures are for illustration and easy understanding whereas issue is current). The demand in SCN is for 14,00,000 whereas on netting the both cases, the demand should at best be 2,00,000. This line of argument was not accepted even at adjudication level and issue is currently with the first appellate authority.
The GST Council may also address few more issues such as clubbing of show cause notices for multiple years, wrong invocation of Section 74, irrational demands under section 17 (5) etc. As we are already in the tenth year of GST, the council may also recommend to the Government for deletion of clause d of sub section 5 of section 17 of the CGST Act 2017 which does less gain and more pains to all the stakeholders, which is being covered in the next article.