Top Stories No Reversal of ITC when claim IGST instead of CGST and SGST: Kerala HC [Read Order] The bench set aside the impugned judgment of the Single Judge and allowed the Writ Petition by quashing order By Yogitha S. Yogesh – On November 30, 2024 5:21 pm – 3 mins read In a recent case related to the wrongful use of Integrated Goods And Service Tax(IGST) , the Kerala High Court has held that Input Tax Credit (ITC) not reversible when claim IGST instead of CGST and SGST.

The bench set aside the impugned judgment of the Single Judge and allowed the Writ Petition by quashing 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. Rejimon Padickapparambil Alex, the appellant runs a proprietorship concern with the name and style ‘Padiken Silks’, and is a registered dealer on the rolls of the 5th respondent for the purposes of payment of GST.  During the assessment year 2017-2018, and in particular, during the period from July 2017 to March 2018, the appellant received various inward supplies of goods, both inter-state and intrastate.

Become a PF & ESIC expert with our comprehensive course – Enroll Now For the inter-state inward supplies, on which IGST (Integrated Goods and Services Tax) was paid by the supplier, the appellant had to avail input tax credit by resorting to a procedure whereby he had to show the IGST amount paid by the supplier, as the IGST paid by him in the Form GSTR 2A generated by him, and thereafter, if there was no outward supply on which IGST had to be paid by him he had to show the same IGST amount as Credit available in the Form GSTR 3A and then split the IGST amount into the CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) components in the said Form 3A before utilising the same for the purposes of payment of outward taxes. However, on receipt of the IGST paid inward supplies from outside the State, the appellant, instead of showing the IGST component in the eligible credit details in Form GSTR-3B, inadvertently showed the IGST component as nil and added the bifurcated CGST and SGST components of IGST to the existing figures showing eligible CGST and SGST credit.

This resulted in a mismatch between Form GSTR 2A and Form GSTR 3B maintained in relation to the assesse. Become a PF & ESIC expert with our comprehensive course – Enroll Now The Assessing Authority noticed this mismatch and opined that this mismatch had resulted in the appellant utilising ‘unavailable credit’ towards payment of CGST and SGST on outward supplies. He therefore proceeded to issue a notice to the appellant demanding the return of the CGST/SGST amounts allegedly utilised in excess by the appellant. The proceedings initiated through the said notice culminated in Ext.P14 order confirming the demand against the appellant.  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  Judge, therefore, merely directed the 5th respondent to consider and pass orders on the refund application without actually pronouncing on the legality of the actions of the respondent.   Become a PF & ESIC expert with our comprehensive course – Enroll Now The only mistake that was occasioned by the appellant 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 court of Dr. Justice A.K.Jayasankaran Nambiar & Justice K. V. Jayakumar  copied the order 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.

The bench set aside the impugned judgment of the Single Judge and allowed the Writ Petition by quashing 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