Tag: Technical Mistake

IGST availed as CGST and SGST – Order demanding Penalty and Interest, Set Aside

Citation:

Maruthengal Moideen vs. State Tax Officer

High Court of Kerala

[2025] 171 taxmann.com 215 (Kerala)[13-01-2025]

A similar decision was given in the case of Kalleppuram Metals vs. Union of India, summarized as below (Click to Visit):

Claiming IGST as CGST/SGST does not attract Penalty and Interest – Order remanded back for reconsideration

Findings of the Court:

Relying upon the decision in the case of Rejimon Padickapparambil Alex v. Union of India and others 2024 KHC Online 7215 (Summarized in the above Kalleppuram Metals Case), it was observed that:

  1. “Electronic credit ledger has to be treated as a pool of funds, designated for different types of taxes such as IGST, CGST and SGST. The credit ledger represents a wallet with different compartments of funds“.
  2. Since the petitioner had availed credit under the CGST and SGST instead of IGST and utilised the same for payment of GST, the benefit of the decision in Rejimon Padickapparambil’s case is applicable to the petitioner.

Held:

  1. The Impugned Orders to the extent of demanding Interest and Penalty are set aside.
  2. Department is directed to reconsider the matter afresh, bearing in mind the decision in Rejimon Padickapparambil’s case.

Claiming IGST as CGST/SGST does not attract Penalty and Interest – Order remanded back for reconsideration

Citation:

Kalleppuram Metals vs. Union of India

High Court of Kerala

[2025] 171 taxmann.com 32 (Kerala)[09-12-2024]

Facts of the Case:

  1. Appellate Authority has confirmed the Order passed confirming penalty and interest on cross availment of ITC.
  2. For the FY 2017-18, it was alleged that the petitioner has availed CGST and SGST credits wrongly, which were actually IGST Credits. A demand of Rs.14,57,108/- along with interest of Rs.12,03,691/- and a penalty of Rs.1,45,710/- was imposed under Section 73(1) of the GST Act vide the impugned Order by the Adjudicating Authority. On an Appeal, the same were confirmed by the appellate Authority.
  3. It was observed that in a recent judgment of this Court in Rejimon Padickapparambil Alex v. Union of India [2024 KHC Online 7215], on an almost similar situation, the ITC available in the electronic credit ledger should be considered as a pool of funds designated for different types of taxes, such as IGST, CGST and SGST. It was further observed that the said credit ledger represents a wallet with compartments for IGST, CGST and SGST funds and the entire wallet has to be taken into consideration, instead of individual compartments.

Findings of the Court:

  1. It was concluded that Section 73 of the GST Act is attracted only when tax has not been paid or when there is a short payment or when any amount has been erroneously refunded, or where any input tax has been wrongly availed or utilised for any reason.
  2. It cannot be said that there is any wrongful availment of ITC, since the GST system treats Credit Ledger as a unified source, and there cannot be any loss of revenue.
  3. The mistake commited by the petitioner was at the most a technical one.

Held that:

  1. The Impugned Order to the extent of imposing penalty and interest, is set aside.
  2. The department is directed to reconsider the appeal in the light of the above mentioned case.