Input tax credit utilisation across GST heads required fresh reconsideration after the challenged disallowance was set aside.

Disallowance of input tax credit based on utilisation of IGST credit against CGST and SGST liabilities was examined against the settled principles governing the electronic credit ledger, which was treated as a pool of funds with separate tax-head compartments. The challenged determination and appellate orders were found to require fresh scrutiny in light of those principles, and the matter was remitted for reconsideration after hearing the taxpayer. The effect is that the assessing authority must reassess the credit utilisation issue on the existing legal framework rather than on the impugned reasoning.

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Issues: Whether the disallowance of input tax credit on the basis of utilisation of IGST credit towards CGST and SGST liabilities called for interference and reconsideration.

Analysis: The credit standing in the electronic credit ledger was treated as a pool of funds with separate compartments for different tax heads. The challenged orders were considered against the principles already laid down on utilisation of IGST credit for meeting CGST and SGST liabilities. In that light, the matter required fresh examination by the assessing authority.

Conclusion: The impugned determination order and appellate order were set aside and the matter was remitted for reconsideration after hearing the petitioner.

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