Manissery Jayachandran Vs Union of India (Kerala High Court)
Kerala High Court, in the case of Manissery Jayachandran Vs. Union of India, has set aside an assessment order and appellate order that denied Input Tax Credit (ITC) to a petitioner for allegedly availing it under the wrong head in the Electronic Credit Ledger (ECL). The court emphasized that the ECL should be considered a unified pool of funds, regardless of the specific tax head under which the credit was initially claimed.
The petitioner, an assessee for the 2017-18 assessment year, reportedly received both interstate and intrastate inward supplies. Due to the transitional period from Value Added Tax (VAT) to Goods and Services Tax (GST), the eligible ITC was mistakenly claimed under different heads. Subsequently, notices were issued under Section 73 of the Central Goods and Services Tax Act, 2017, demanding the ITC wrongly claimed under the Integrated Goods and Services Tax (IGST) head, along with interest and penalty. This led to an assessment order (Exhibit-P14) and a subsequent appeal (Exhibit-P15), both of which upheld the denial of ITC, prompting the petitioner to file a writ petition.
During the hearing, the court referenced a previous Division Bench decision in Rejimon Padickapparambil Alex v. Union of India and Others [2024 KHC Online 7215]. This judicial precedent established that the electronic credit ledger functions as a “wallet with different compartments” for IGST, Central Goods and Services Tax (CGST), and State Goods and Services Tax (SGST). The Division Bench had observed that merely availing credit from one compartment under another does not constitute a “wrong availing” of ITC.
