S & D Sales Marketing Vs Deputy Commissioner of State Tax (Kerala High Court)
The Kerala High Court addressed a dispute involving S & D Sales Marketing and the Deputy Commissioner of State Tax regarding the disallowance of Input Tax Credit (ITC). The petitioner, a registered taxpayer dealing in rice and dairy products, had challenged an order that disallowed ITC and imposed tax, interest, and penalties for the financial year 2017-18. The order was upheld on appeal, prompting the petitioner to file a writ petition.
The central issue revolved around the petitioner’s utilization of Integrated Goods and Services Tax (IGST) credit to settle liabilities under State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST). The tax authorities had deemed this practice contrary to law, leading to the disallowance of the ITC.
The petitioner argued that their case was covered by the precedent set in the Kerala High Court’s own decision in Rejimon Padickapparambil Alex v. Union of India. In that case, the court had clarified that the electronic credit ledger should be viewed as a “pool of funds” or a “wallet with different compartments” for various taxes. Crucially, the court had ruled that IGST credits can be used to offset liabilities for both SGST and CGST, and vice versa.
