2025 (1) TMI 1302 - HC - GST

Tax Credit Dispute Resolved: Electronic Ledger Allows Cross-Utilization, Mandates Fresh Assessment and Refund Within 90 Days

Star Roofs And Metals Versus The Assistant Commissioner Tax Payer Ernakulam, The State Tax Officer Ernakulam, The Joint Commissioner Of State Tax Appeals Cochin.

HC allowed the writ petition challenging a tax assessment order for Input Tax Credit utilization. The court found the original assessment inappropriate, ... Liability for utilisation of Input Tax Credit in excess - HELD THAT:- This Court has, in the decision Rejimon Padickapparambil Alex v. Union of India and Others [2024 (12) TMI 399 - KERALA HIGH COURT] observed that the electronic credit ledger is in the nature of a wallet with different compartments of Integrated Goods and Services Tax, Central Goods and Services Tax and State Goods and Services Tax and there cannot be any wrong availment of input tax credit merely because a taxpayer had availed the benefit of credit of input tax available in IGST under the heads CGST and SGST. In the instant case, a perusal of the order of assessment produced as Exhibit-P2 reveals that the alleged mistake committed by the petitioner is by availing the benefit of Input Tax Credit available in IGST, under the heads CGST and SGST. The said method of availing ITC cannot be said to be a wrong availment of Input Tax Credit warranting the imposition of any penalty as observed in the above referred judgment. Therefore, it is only appropriate that the order of assessment itself is set aside and a reconsideration be directed by the proper officer. Though petitioner had preferred an appeal, in order to avoid continuance of an unnecessary procedure, it is deemed appropriate to exercise the jurisdiction under Article 226 of the Constitution of India to set aside Exhibit-P2 itself and direct a reconsideration. Conclusion - i) The said method of availing ITC cannot be said to be a wrong availment of Input Tax Credit warranting the imposition of any penalty. ii) It is only appropriate that the order of assessment itself is set aside and a reconsideration be directed by the proper officer. Petition allowed. Petitioner challenged the assessment order dated 23.12.2023 (assessment year 2017-18) which imposed a liability of Rs.19,94,818/- under Section 73 of the Central Goods & Services Tax Act, 2017 and the State Goods and Services Tax Act, 2017 for alleged excess utilisation of Input Tax Credit (ITC). The court relied on the precedent that 'the electronic credit ledger is in the nature of a wallet with different compartments of Integrated Goods and Services Tax, Central Goods and Services Tax and State Goods and Services Tax and there cannot be any wrong availment of input tax credit merely because a taxpayer had availed the benefit of credit of input tax available in IGST under the heads CGST and SGST.' The assessment found the petitioner's only alleged error was availing IGST credit under CGST/SGST heads, which the cited authority treats as not amounting to wrong availment of ITC. Exhibit-P2 (order dated 23.12.2023) was set aside under Article 226; the proper officer is directed to reconsider afresh in light of the cited decision after hearing within three months. The appellate authority is to record closure of the pending appeal and the petitioner's pre-deposit is to be refunded on application.