HOME SOLUTIONS vs Commissioner of Central Tax & Central Excise Kochi, K.C. Jayakumar

GOODS AND SERVICES TAX APPELLATE TRIBUNAL
ERNAKULAM BENCH
Division Bench :: Court No. I

APPEAL NO: APL/48/ERN/2026
[Arising out of OIA CLT-GST-000-APP-113-2025-26-JC dated 26/8/2025 passed by the
Joint Commissioner (Appeals), Central Tax, Central Excise & Customs, Kochi]


HOME SOLUTIONS, PALAKKAD
.............Appellant
Vs
COMMISSIONER OF CENTRAL TAX &
CENTRAL EXCISE, KOZHIKODE

.............Respondent
for Appellant for Respondent
KV Padmanathan, Advocate Shri Baiju Daniel, AR

CORAM:
Hon’ble Shri Subramanya Rayaprol, Vice President
Hon’ble Shri Ramamoorthi Sriram, Member (Technical)
…………………………………………………………………………………………………
FINAL ORDER NO: 22/EKM/KERALAM/2026
Date of Hearing: 06-10-2026
Date of Order 30-10-2026

Order per: Shri Ramamoorthi Sriram, Member (Technical)

1.0 The present Appeal ( APL/48/ERN/2026) has been preferred by M/s Home
Solutions (GSTIN 32AAFFH8776F1Z8) (Appellant) against Order-in-Appeal No. OIA
CLT-GST-000-APP-113-2025-26-JC dated 26/8/2025 passed by the Joint
Commissioner (Appeals), Central Tax, Central Excise & Customs, (Appellate
Authority).



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2.0 Brief Facts of the Case:

2.1 On scrutiny of the returns of the Appellant the following discrepancy was noticed:
(i) Ineligible ITC availed in respect of invoices/debit notes issued by suppliers who
have not filed their GSTR-3B returns – GST to the tune of Rs.1,42,398/- (CGST-
Rs.32,447/-, SGST-Rs.32,447/- and IGST-Rs.77,504/-). After due process of law, vide
Order-in-Original No. 12/2024-25/GST-PNR dated 15.04.2024 passed by the
Superintendent of Central Tax and Central Excise, Palakkad North Range
(“Respondent” for short), the demand of Rs.1,42,398/- (CGST-Rs.32,447/- , SGST-
Rs.32,447/- and IGST-Rs.77,504/-) was confirmed for recovery u/s 73(9) of the
CGST/KSGST Act, 2017, read with Section 20 of the IGST Act, 2017. The
Respondent had appropriated an amount of Rs.20,538 (CGST- Rs.10,269/- and
SGST- Rs.10,269/-) paid by the Appellant. Further, the Respondent had confirmed the
demand for interest u/s 50(3) ibid on the amount confirmed and appropriated an
amount of Rs.19,464/- (CGST9,732/- and SGST- 9,732/-) paid towards interest and
imposed a penalty of Rs.40,000/- (CGST-Rs.10,000/-, SGST-Rs.10,000/- and IGST-
Rs.20,000/-) u/s 73(9) of the Act ibid.

2.2 Being aggrieved by the said Order, the Appellant preferred an appeal before the
Appellate Authority who vide the impugned order allowed partial relief with respect to
certain suppliers certificates produced and
(i) confirmed the demand of 78,548/- (CGST-Rs.522/-, SGST-Rs.522/- and IGST-
Rs.77,504/-) under Section 73(9) of the CGST/KSGST Act, 2017 read with Section 20
of the IGST Act,
(ii.) confirmed the demand of interest under Section 50(3) of the CGST/KSGST Act,
2017, read with Section 20 of the IGST Act, 2017
(iii) confirmed the penalty of Rs.40,000/- (CGST-Rs.10,000/-, SGST-Rs.10,000/- and
IGST-Rs.20,000/-) under Section 73(9) CGST/KSGST Act, 2017, read with Section 20
of the IGST Act, 2017 for wrong availment of ITC .

2.3. Aggrieved by the portion of the order confirming the demand of tax, interest and
penalty, the appellant has filed this appeal before the Tribunal.


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3.0 Grounds of Appeal / Submissions of the Appellant:

3.1 The Appellate Authority erred in confirming the demand of Rs.522/- each under
CGST and SGST, without appreciating that the Appellant had already discharged the
said liability together with applicable interest. Having taken note of the payment already
made and having appropriated substantial portions thereof, the authorities below ought
to have appropriated the balance amount of Rs.522/- each under CGST and SGST as
well, instead of confirming the same once again, resulting in duplication of demand and
recovery.

3.2 The Appellate Authority erred in sustaining penalty of Rs.10,000/- each under the
CGST Act and KSGST Act, despite the admitted position that the tax and interest
attributable to the said demand had been paid within thirty days of issuance of the
show cause notice. In terms of section 73(8) of the CGST Act, 2017, no penalty is
leviable where the tax along with interest is paid within thirty days from the date of
issuance of notice and, therefore, the imposition of penalty under section 73(9) is
wholly without jurisdiction and liable to be set aside.

3.3 The Appellate Authority failed to adjudicate the specific ground raised by the
Appellant that the disputed IGST amount of Rs.77,504/- pertained to invoices reflected
in GSTR-2A for financial year 2017-18, whereas the corresponding goods were
actually received and accounted for only during financial year 2018-19 and,
consequently, the input tax credit was availed only in financial year 2018-19 in
accordance with section 16(2) of the Act.

3.4 The Appellate Authority failed to appreciate that the disputed IGST amount of
Rs.77,504/- pertaining to invoices dated 27-03-2018 and 31-03-2018 were duly
reflected in the Appellant’s GSTR-2A pertaining to the financial year 2017-18 and,
therefore, the genuineness of the underlying transactions and the corresponding tax
paid by the suppliers stood established.

3.5 The authorities below erred in proceeding on the erroneous assumption that the
input tax credit was wrongly availed merely because the invoices pertained to the
previous financial year, without appreciating that the goods covered by the invoices
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were actually received during April, 2018 and the credit was availed only in financial
year 2018-19 upon satisfaction of the conditions prescribed under section 16(2)(b) of
the Act.

3.6 The authorities below failed to appreciate that mere reflection of invoices in GSTR-
2A for financial year 2017-18 does not mandate availment of credit in the same
financial year and that the right to avail credit arises only upon receipt of goods and
fulfilment of the statutory conditions.

3.7 The authorities below failed to appreciate that the disputed IGST credit of
Rs.77,504/- formed part of the un-availed input tax credit of Rs.4,06,655/- reflected in
the annual return in Form GSTR-9 for the financial year 2017-18 and, therefore, there
was neither excess availment nor double availment of input tax credit.

3.8 The denial of credit on the sole ground that the invoices appeared in GSTR-2A of
the previous financial year is arbitrary, hyper technical and contrary to the scheme of
seamless flow of credit under the Act.

3.9 Without prejudice to the above, the authorities below failed to appreciate that no
allegation of fake invoices, non-receipt of goods, loss to revenue or double availment
of credit has been made and, therefore, denial of substantive input tax credit on
procedural grounds defeats the object and purpose of the GST legislation.

3.10 Shri KV Padmanathan learned Advocate, appeared for the appellant and made a
forceful submission on the above lines.

4.0 Submissions of the Respondent /AR
Shri Baiju Daniel , learned AR submitted as follows:

4.1 In connection with the issues arising in the above appeal, they had requested the
jurisdictional Commissionerate to verify the documents and factual contentions
raised by the appellant in the Additional Written Submission dated 02.10.2026,
particularly with regard to the ITC of ₹77,504/- relating to invoices issued by M/s.
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Finolex Industries Ltd. and the appropriation of the tax amount already paid through
FORM GST DRC-03.
4.2 In response, the Assistant Commissioner (Review), Kozhikode Commissionerate,
vide letter dated 15-10-2026, has forwarded the verification report dated
15.10.2026 received from the Assistant Commissioner, Palakkad Division, along
with the report of the Superintendent, Palakkad North Range, and the relevant
supporting documents. The verification confirmed that the invoices and the
Chartered Accountant’s certificate, including UDIN verification, support the
disputed ITC of ₹77,504/-. It also confirmed that ₹10,792/- each towards CGST
and SGST had already been paid, but only ₹10,269/- each was appropriated in the
Order-in-Original.
4.3 After considering the payments made and the relief granted in the Order-in-Appeal,
no tax remains due under these heads.
4.4 Further, the penalties of ₹10,000/- each under CGST and SGST are not
sustainable, as the tax and interest were paid within the period prescribed under
Section 73(8) of the CGST Act, 2017.
4.5 The jurisdictional Division has accordingly reported that the demand of tax, interest
and penalty confirmed by the Order-in-Appeal is not sustainable on the basis of the
records and has recommended that the taxpayer’s appeal before the Hon’ble
Tribunal may not be contested on merits.
4.6 In view of the aforesaid verification and the findings communicated by the
jurisdictional authorities, the factual issues that necessitated further verification
stand addressed. Consequently, no further written submission contesting the
appeal on merits is considered warranted from the Department. The verified
position and the Department’s stand are accordingly placed before the Hon’ble
Tribunal for kind consideration.

5 Discussions and Findings:

5.1 We find that basically the appellant is in appeal against para 11(i) to 11(iii) of the
OIA which reads as follows:
11(i) I confirm the demand of 78,548/- (CGST-Rs.522/-, SGST-Rs.522/- and IGST-
Rs.77,504/-) under Section 73(9) of the CGST/KSGST Act, 2017 read with Section 20
of the IGST Act, 2017 ……
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(ii). I confirm the demand of interest under Section 50(3) of the CGST/KSGST Act,
2017, read with Section 20 of the IGST Act, 2017 ……..
(iii). I impose a penalty of Rs.40,000/- (CGST-Rs.10,000/-, SGST-Rs.10,000/- and
IGST-Rs.20,000/-) under Section 73(9) CGST/KSGST Act, 2017, read with Section 20
of the IGST Act, 2017 for wrong availment of ITC …….
5.2 We find that in view of the submissions of the learned AR as detailed in para 4.2
and 4.3 above, the Revenue itself has conceded (on the basis of verification of
documents produced by the appellant) that the demand of Rs 77504 as confirmed
in the OIA is not sustainable.
5.3 It is also confirmed that ₹10,792/- each towards CGST and SGST had already
been paid, but only ₹10,269/- each was appropriated in the Order-in-Original and
therefore the demand of Rs 522 (CGST) and Rs 522(SGST) was purely on
account of incomplete appropriation of the dues already paid, in the OIO. (as
contended by the appellant – para 3.1 above). We therefore order appropriation of
this amount from the amount of Rs 10792 already paid by the appellant.
5.4 As the Revenue itself has conceded (para 4.3 and 4.4 above ) that no tax is due
from the appellant, as a consequence, the demand of interest is also not
sustainable.
5.5 With regard to penalty we take on record the submissions of the Revenue that the
penalties of ₹10,000/- each under CGST and SGST are not sustainable, as the tax
and interest were paid within the period prescribed under Section 73(8) of the
CGST Act, 2017 (para 4.4). Though the submissions of the learned AR are silent
on the penalty of Rs 20,000 under IGST, we find that the going by the same logic
the above said penalty is also not sustainable. This is further confirmed by the
submissions in para 4.5 that “jurisdictional Division has accordingly reported that
the demand of tax, interest and penalty confirmed by the Order-in-Appeal is not
sustainable on the basis of the records and has recommended that the taxpayer’s
appeal before the Hon’ble Tribunal may not be contested on merits.”
5.6 In view of the above findings, we find that no other question survives in this case
and all issues are resolved. We are heartened to note that this is one of those rare
cases which has resulted in a happy denouement, wherein both the appellant and
the respondent are on the same page. We commend the efforts of the revenue
which have resulted in a quick verification of the facts and also the earnestness
and grace with which the revenue has conceded the case based on the above
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verification. This is in keeping with the true spirit of the national litigation policy
which envisages avoidance of unnecessary litigation and eschewing of an
adversarial approach towards the tax payer. We also place on record our
appreciation of the assistance provided by Shri Baiju Daniel, learned AR, to the
bench in enabling a quick resolution of all issues to the mutual satisfaction of both
parties.

6.0 In view of the findings above, the following order is passed:
a. We order appropriation of balance amount Rs.522/- each under CGST and
SGST, from the sum of Rs 10792 each towards CGST and SGST already paid by
the appellant.
b. We allow the appeal of the appellant and set aside paras 11(i) to 11(iii) of the
Order in appeal, with consequential relief.

Order pronounced in open court on 30/10/2026.

Rayaprol
Subramanya
Viswanatha
Digitally signed by
Rayaprol Subramanya
Viswanatha
Date: 2026.10.30
16:54:39 +05'30'

Subramanya Rayaprol
Vice President



Ramamoorthi Sriram
Ramamoorthi
Sriram
Digitally signed by
Ramamoorthi Sriram
Date: 2026.10.30 17:33:18
+05'30'
Member (Technical)
Date: 30-10-2026.


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