Mistake Committed By Assessee Was Inadvertent & Technical; No Wrongful Availment Of ITC: Kerala High Court Quashes Demand Order

The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that “……The mistake was also insignificant because it is not in dispute that there was no outward supply attracting IGST that was effected by him……”

In this case, on receipt of the IGST paid inward supplies from outside the State, the assessee/appellant, instead of showing the IGST component in the eligible credit details in Form GSTR-3B, inadvertently showed the IGST component as nil and added the bifurcated CGST and SGST components of IGST to the existing figures showing eligible CGST and SGST credit.

This resulted in a mismatch between Form GSTR 2A and Form GSTR 3B maintained in relation to the assessee. The Assessing Authority noticed this mismatch and opined that this mismatch had resulted in the assessee utilising 'unavailable credit' towards payment of CGST and SGST on outward supplies.

The Assessing Authority therefore issued a notice to the assessee demanding the return of the CGST/SGST amounts allegedly utilised in excess by the assessee which was confirmed through an order.

The assessee submitted that the demand in the order was wholly unsustainable since there was admittedly no excess utilisation of credit since the assessee was entitled to take credit on the IGST paid on inter-state inward supplies.

It was further argued that the only mistake that was occasioned by the assessee was that he had not shown the IGST amounts separately in Form GSTR 3B against available credit and had resorted to an exercise of splitting the IGST amount towards CGST and SGST since he did not have any outward supply that attracted IGST.

The bench noted that the notice issued to the assessee, and the demand confirmed against him, were in proceedings initiated under Section 73 of the GST Act. The said provisions are attracted only when it appears to a proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax has been wrongly availed or utilised for any reason.

“……there has been no wrong availment of credit, and that the only mistake committed by the appellant was an inadvertent and technical one, where he had omitted to mention the IGST figures separately in Form GSTR 3B. The mistake was also insignificant because it is not in dispute that there was no outward supply attracting IGST that was effected by him” added the bench.

In view of the above, the bench allowed the petition.

Case Title: Rejimon Padickapparambil Alex v. Union Of India

Case Number: WA NO. 54 OF 2024

Counsel for Appellant/ Assessee: R. Jaikrishna

Counsel for Respondent/ Department: P.R Sreejith

Click Here To Read/Download The Order