Facts

• The present writ petition was filed challenging the order of the Appellate Authority upholding the demand of tax and interest on account of wrong cross availment of Input Tax Credit (‘ITC’) by the Petitioner.
• For the financial year 2017-18, the Petitioner was served a Show Cause Notice under Section 73 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) wherein it was alleged that Petitioner had wrongly availed IGST credit as CGST and SGST credits

Issue before the Hon’ble High Court of Kerela

• Whether the availment of IGST credit as CGST and SGST credits would amount to wrongful availment of ITC?

Discussion & Ruling

The Hon’ble High Court of Kerela (‘High Court’) set aside the impugned order basis the following observations:

• In Rejimon Padickapparambil Alex v. Union of India [2024 KHC Online 7215], wherein while deciding an identical issue of  wrong cross availment of ITC, the High Court held that 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. 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
• Section 73 of the CGST Act is attracted only when tax has not been paid or short paid, or where any ITC has been wrongly availed or utilised for any reason
• However, in the present case, it could not be stated that the Petitioner had wrongly availed input tax credit and it was at the most a technical mistake since credit of CGST/SGST was availed instead of IGST
• There cannot also be any loss of revenue as well, arising from the utilization of CGST/ SGST instead of IGST.