T R M Associates Vs State Tax Officer (Kerala High Court)
The Kerala High Court considered a writ petition filed by T R M Associates, a registered GST dealer, challenging assessment and appellate orders involving input tax credit (ITC) claimed under different tax heads. The controversy related to the period July 2017 to February 2018, during which the petitioner had availed IGST credit under the CGST and SGST heads. The State Tax Officer had issued a show-cause notice under Section 73 of the Central Goods and Services Tax Act, 2017, pointing to several discrepancies. An assessment order determined tax, interest and penalty, and the Joint Commissioner (Appeals) subsequently dismissed the taxpayer’s appeal. The petitioner then approached the High Court, stating that the statutory appellate Tribunal had not been constituted.
The petitioner confined its challenge to the alleged wrongful availment of IGST input tax credit under the CGST and SGST heads. According to the petitioner, the incorrect classification was a technical error and should not be treated as illegal availment. Counsel relied on the Kerala High Court Division Bench judgment in Rejimon Padickaparambil Alex v. Union of India and Others, 2024 SCC OnLine Ker 7016. The petitioner further submitted that correcting the ITC classification issue would enable it to discharge the remaining liability under the then-existing Amnesty Scheme. It did not contest the other determinations made in the assessment and appellate orders.
The High Court examined the principle explained in Rejimon Padickaparambil Alex. Under that ruling, the electronic credit ledger was described as a wallet containing separate IGST, CGST and SGST compartments, with the entire ledger to be considered as a pool rather than treating each compartment in isolation for the issue addressed in that case. Justice Bechu Kurian Thomas found that neither the assessing authority nor the appellate authority had considered the binding Division Bench precedent when deciding the petitioner’s ITC classification dispute. The High Court therefore held that the limited issue required fresh consideration.
The Court left the other findings in the assessment and appellate orders undisturbed, in view of the petitioner’s concession. It set aside the findings on alleged wrongful availment of ITC under different heads and directed the State Tax Officer to reconsider that claim in accordance with Rejimon Padickaparambil Alex. The assessing authority was directed to complete reconsideration expeditiously and in any event within 30 days from receipt of the judgment. The Court emphasised strict adherence to this timeline in view of the Amnesty Scheme stated to be available until 31 March 2025. The writ petition was disposed of without granting an unconditional ITC allowance.
Cases Discussed
Rejimon Padickaparambil Alex v. Union of India and Others, 2024 SCC OnLine Ker 7016 (Kerala High Court, Division Bench) — Binding precedent concerning ITC reflected under different tax heads in the electronic credit ledger. Related TaxGuru discussion (not an exact judgment link).
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Petitioner is a dealer under the Goods and Service Tax Act, 2017. For the period July 2017 to February 2018, petitioner had availed the entire Input Tax Credit available under the IGST under the heads CGST and SGST. Subsequently, Ext.P2 show cause notice was issued on 29-12-2021, pointing out various anomalies and proposing to pass orders under Section 73 of the CGST Act, 2017. By Ext.P3 order dated 29.12.2021, the first respondent – State Tax Officer determined the tax liability, interest and penalty totalling to Rs.1,83,65,48/- under Section 73 of the CGST Act. An appeal was filed by the petitioner before the Appellate Authority. However, by Ext.P5 order, the appeal was dismissed upholding the order of the first respondent. Since the statutory Tribunal has not been constituted, petitioner has approached this Court.
2. The limited contention raised by the petitioner is in respect of the availing of ITC under the IGST under the heads CGST and SGST, which according to the petitioner was a technical mistake and cannot be regarded as illegal as observed by this Court in Rejimon Padickaparambil Alex v. The Union of India and Others [2024 SCC OnLine Ker 7016]. According to the learned counsel, if the said anomaly in the impugned order is rectified, the remaining liability can be cleared as per the Amnesty Scheme now in existence.
3. I have heard Sri.Reghunathan V.G., the learned counsel for the petitioner and Sri.V.Girishkumar, the learned Standing Counsel as well as Smt.Dr.Thushara James, the learned Senior Government Pleader.
4. In Rejimon Padickaparambil Alex’s case (supra), a Division Bench of this Court had observed that the Input Tax Credit available in the electronic credit ledger should be treated as a pool of funds designated for different types of taxes such as IGST, SGST and CGST. It was also observed that the electronic credit ledger represents a wallet with different compartments of IGST, SGST and CGST and the entire wallet has to be taken into consideration not as individual compartment.
5. A perusal of Ext.P3 assessment order as well as Ext.P5 Appellate Order reveals that the aforesaid principle laid down in Rejimon Padickaparambil Alex’s case (supra) was not borne in mind by both the authorities. Therefore the said issue requires reconsideration in the light of the binding precedent mentioned above.
6. As far as the remaining issues in the impugned order under Section 73 and the Appellate Order are concerned, petitioner concedes that it has no objection in complying with the determination made thereunder.
7. In view of the above, the challenge against Ext.P3 and Ext.P5 orders except as regards the finding on alleged wrong availment of ITC under the different heads are confirmed. The finding on wrong availment of ITC in Ext.P3 order as well as confirmed in Ext.P4 are set aside and the first respondent is directed to reconsider the said claim afresh bearing in mind the decision in Rejimon Padickaparambil Alex’s case (supra), as expeditiously as possible, at any rate, within a period of 30 days from the date of receipt of a copy of this judgment. The timeline fixed thereunder shall strictly be complied with, considering the possibility of the petitioner availing the benefit of the Amnesty Scheme available till 31.03.2025.
The writ petition is disposed of as above.
