Ashok Drugs (Wholesale) Vs Deputy State Tax Officer (Kerala High Court)
The Kerala High Court addressed a writ petition filed by Ashok Drugs (Wholesale) challenging an order issued under Section 73 of the GST Act for the assessment year 2017-2018. The order was based on the allegation that the petitioner claimed ineligible input tax credit (ITC) against the CGST/SGST Acts.
The petitioner contended that while supplying data in the GSTR 3B return for January 2018, they inadvertently paid IGST input credit despite having no interstate sales. The core argument was that the wrong application or adjustment of input tax credit under a different head should not be grounds to initiate proceedings under Section 73 of the CGST Act.
The High Court found that the issue was squarely covered in the petitioner’s favor by an earlier Division Bench decision, Rejimon Padikapprambil Alex v. Union of India and Others. That precedent held that Section 73 is attracted only when tax has not been paid, is short paid, erroneously refunded, or where ITC has been wrongfully availed or utilized for any reason. If the case involves the adjustment of input credit in a different head, proceedings under Section 73 are not attracted because no revenue loss is caused.
