MJBR Marketing and Financial Services Pvt. Ltd. Vs Union of India (Kerala High Court)
Kerala High Court has set aside a tax and penalty order issued by GST authorities against a taxpayer who inadvertently claimed input tax credit (ITC) under the wrong tax head. The court ruled that such an error, where CGST and SGST credits were mistakenly availed and utilized as IGST credit, does not warrant proceedings under Section 73 of the CGST Act, especially when there is no actual revenue loss to the department collectively.
The case involved MJBR Marketing and Financial Services Pvt. Ltd., a registered GST taxpayer engaged in marketing and financial services. According to the petitioner, a human error occurred during October 2017 where available CGST and SGST input tax credits were incorrectly declared and utilized as IGST credit. This led to a mismatch between their GSTR 3B and GSTR 2A filings. The petitioner contended that due to the absence of a facility to revise the filed returns at the time, they proceeded to utilize the inadvertently claimed IGST credit to offset their output tax liability under IGST.
Subsequently, the GST department initiated action, culminating in an order that imposed tax, interest, and penalty on the petitioner under Section 73 of the CGST Act for the alleged wrongful availment and utilization of IGST credit. The department’s position, as presented in court, was that the petitioner had no inward inter-state supplies during the period, and thus no legitimate IGST credit was available in their electronic credit ledger. They argued that the petitioner improperly used CGST and SGST credits under the IGST head, disrupting the intended apportionment of tax revenue between the central and state governments.
