Order to Be Set Aside as No Penalty for IGST Utilization Against CGST and SGST | HC

Case Details: Star Roofs and Metals vs. Assistant Commissioner Tax Payer Services Circle - [2025] 172 taxmann.com 26 (Kerala)

Judiciary and Counsel Details

• Bechu Kurian Thomas, J.
• Akhil Suresh, Adv. for the Petitioner.
• Dr. Thushara James, Adv. Senior Government Pleader for the Respondent.

Facts of the Case

The petitioner, a registered taxpayer under the Goods and Services Tax (GST) regime, was subjected to an assessment order wherein the tax authorities alleged wrongful utilization of Input Tax Credit (ITC) available under IGST towards CGST and SGST. This resulted in an imposed tax liability under Section 73 of the CGST Act, 2017, and the Kerala GST Act, 2017. The petitioner filed an appeal before the Appellate Authority, but despite a significant lapse of time, no decision had been rendered. Consequently, the petitioner approached the Hon’ble High Court through a writ petition, challenging the assessment order on the grounds that utilization of ITC in IGST towards CGST and SGST is legally permissible and does not constitute wrongful availment warranting penalty.

High Court Held

The Hon’ble High Court held that the electronic credit ledger operates as a unified system with separate compartments for IGST, CGST, and SGST, and the utilization of ITC from IGST towards CGST and SGST does not amount to wrongful availment warranting penalty under Section 73 of the CGST Act, 2017. The assessment order was set aside, and the matter was remanded for reconsideration in light of the ruling in Rejimon Padickapparambil Alex v. Union of India and Others. The Court further directed that the pre-deposit made by the petitioner be refunded upon application and that the pending appeal be closed in light of the present ruling. The Hon’ble High Court held that the electronic credit ledger operates as a unified system with separate compartments for IGST, CGST, and SGST, and the utilization of ITC from IGST towards CGST and SGST does not amount to wrongful availment warranting penalty under Section 73 of the CGST Act, 2017. The assessment order was set aside, and the matter was remanded for reconsideration in light of the ruling in Rejimon Padickapparambil Alex v. Union of India and Others. The Court further directed that the pre-deposit made by the petitioner be refunded upon application and that the pending appeal be closed in light of the present ruling.

List of Cases Reviewed

• Rejimon Padickapparambil Alex v. Union of India and Others [2024 KHC Online 7215] – (para 3) followed