2025 (1) TMI 1302 - HC - GST

Liability for utilisation of Input Tax Credit in excess - HELD THAT - This Court has in the decision Rejimon Padickapparambil Alex v. Union of India and Others 2024 (12) TMI 399 - KERALA HIGH COURT observed that the electronic credit ledger is in the nature of a wallet with different compartments of Integrated Goods and Services Tax Central Goods and Services Tax and State Goods and Services Tax and there cannot be any wrong availment of input tax credit merely because a taxpayer had availed the benefit of credit of input tax available in IGST under the heads CGST and SGST. In the instant case a perusal of the order of assessment produced as Exhibit-P2 reveals that the alleged mistake committed by the petitioner is by availing the benefit of Input Tax Credit available in IGST under the heads CGST and SGST. The said method of availing ITC cannot be said to be a wrong availment of Input Tax Credit warranting the imposition of any penalty as observed in the above referred judgment. Therefore it is only appropriate that the order of assessment itself is set aside and a reconsideration be directed by the proper officer. Though petitioner had preferred an appeal in order to avoid continuance of an unnecessary procedure it is deemed appropriate to exercise the jurisdiction under Article 226 of the Constitution of India to set aside Exhibit-P2 itself and direct a reconsideration. Conclusion - i) The said method of availing ITC cannot be said to be a wrong availment of Input Tax Credit warranting the imposition of any penalty. ii) It is only appropriate that the order of assessment itself is set aside and a reconsideration be directed by the proper officer. Petition allowed.

Summary

**Judgment Summary: Kerala High Court****Case Overview:**The petitioner challenged an assessment order dated 23.12.2023 concerning the assessment year 2017-2018. The order imposed a liability of Rs.19,94,818/- for allegedly excessive utilization of Input Tax Credit (ITC) under Section 73 of the Central and State Goods and Services Tax Acts, 2017. The petitioner had appealed this order, but the appeal remained undecided after eight months.**Key Legal Reasoning:**1. **Input Tax Credit Utilization:** The court referenced the case of Rejimon Padickapparambil Alex v. Union of India and Others, which clarified that the electronic credit ledger functions like a wallet with compartments for IGST, CGST, and SGST. It held that using ITC from IGST under CGST and SGST does not constitute "wrong availment" of ITC.2. **Assessment Order:** The court found that the petitioner's method of availing ITC was not incorrect and did not warrant a penalty. Consequently, the assessment order (Exhibit-P2) was deemed inappropriate.3. **Jurisdiction Under Article 226:** The court exercised its jurisdiction under Article 226 of the Constitution of India to set aside the assessment order and directed a fresh reconsideration by the proper officer, aligning with the precedent set in Rejimon Padickapparambil Alex's case.**Court's Decision:**- The assessment order dated 23.12.2023 (Exhibit-P2) was set aside.- The proper officer was instructed to reassess the matter, granting a hearing within three months.- The appeal filed by the petitioner was to be closed, and the pre-deposit refunded upon application.- The writ petition was allowed.