Kaniamparambil Steels Vs State Tax Officer (Kerala High Court)
The Kerala High Court, in Kaniamparambil Steels Vs State Tax Officer, considered a writ petition challenging an adjudication order issued under Section 73 of the GST Act for the assessment year 2017-18. The petitioner, a registered taxpayer, disputed the treatment of input tax credit amounting to ₹2,01,450 arising from utilisation under different GST tax heads. The proceedings originated from scrutiny of the petitioner’s GST returns, which revealed a mismatch between GSTR-1 and GSTR-3B, resulting in short payment of tax. The assessing authority also alleged excess availment of input tax credit that was not reflected in GSTR-2A. These discrepancies formed the basis of the adjudication proceedings.
The petitioner accepted the first discrepancy concerning the mismatch between outward supply returns and tax payments. It expressed willingness to discharge the corresponding liability under the applicable GST Amnesty Scheme. Consequently, the petitioner did not seek relief from the High Court in respect of that admitted deficiency. The second dispute concerned ITC of ₹2,01,450. According to the petitioner, the discrepancy resulted from inadvertent utilisation of credit available under the IGST head against liabilities under CGST and SGST. The petitioner maintained that the issue involved incorrect allocation between tax heads rather than an impermissible substantive claim of credit.
The petitioner relied upon the Kerala High Court’s earlier judgment in Rejimon Padickaparambil Alex v. Union of India & Others, reported as 2024 KHC Online 7215. It submitted that the principles laid down in that decision supported its position concerning incorrect utilisation of ITC under different GST heads. After hearing the parties, Justice Ziyad Rahman A.A. examined the second deficiency concerning the alleged excess ITC of ₹2,01,450. The Court found that this issue was covered in favour of the petitioner by the decision in Rejimon Padickaparambil Alex.
Cases Discussed
Rejimon Padickaparambil Alex v. Union of India & Others, 2024 KHC Online 7215; 2024 (12) TMI 399 (Kerala High Court) — Relied upon by the petitioner and followed by the Court concerning utilisation of GST credit under different tax heads.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner, is a registered tax payer under the provisions of Central Goods and Service Tax Act, 2017 and State Goods and Service Tax Act, 2017. The petitioner is aggrieved by Ext.P1 adjudication order under Section 73 of the GST Act pertaining to the assessment year 2017-18. The aforesaid proceedings were initiated, in view of the fact that, on scrutiny of the returns, it was found that there was mismatch between GSTR-1 and GSTR-3B filed by the petitioner, which resulted in short payment of tax. It was also pointed out that, the petitioner had availed input tax credit in excess of Rs.2,01,450/- and this resulted in claiming of input tax credit to GSTR-3A which was not available in their GSTR-2A. The petitioner had already accepted the first deficiency and is willing to clear the dues under Amnesty scheme.
2. As far as the 2nd dispute is concerned, the mismatch is caused by utilisation of ITC under wrong heads. To be precise, the amounts in their credit under IGST head were inadvertently used for CGST/SGST heads. Specific case of the petitioner is that as far as the 2nd issue is concerned, the same is covered in their favour, by virtue of the observations made by this Court in Rejimon Padickaparambil Alex v. Union of India & Ors. [2024 KHC Online 7215] wherein it is declared that wrong availment of ITC is not illegal but it is justifiable under the scheme of GST.
3. After hearing the learned counsel for the petitioner and learned Government Pleader.
4. I find that as far as the 2 nd deficiency pointed out, with regard to the excess availment of ITC of Rs.2,01,450/- is concerned, the said issue is covered in favour of the petitioner under Rejimon Padickaparambil Alex case cited supra.
In such circumstances, I am of the view that the petitioner has to be granted the benefits. In such circumstances this writ petition is disposed of quashing Ext.P1, to the extent it is covered by the Rejimon Padickaparambil Alex, (supra) and the assessing authority, shall reconsider the issue in the light of the principles laid down by this Court in the decision referred to above. Such re-assessed order shall be passed within a period of two months from the date of receipt of copy of this judgment after hearing the petitioner.
