Trader’s IGST Credit Mistakenly Availed As CGST/SGST: Kolkata GST Tribunal Sets Aside Order, Remands Appeal For Reconsideration

In brief

The question

1. Whether credit inadvertently availed and utilised under the CGST and SGST heads instead of the IGST head constituted wrongly availed or utilised ITC attracting reversal, interest and penalty under Section 73

The court held

The Tribunal held that Section 16(5) absolved the taxpayer of liability to reverse ₹4,176 each under CGST and SGST.

It also directed

It set aside the First Appellate Authority’s order and remanded the matter for fresh consideration in light of the cited Kerala High Court judgments, after giving the taxpayer a reasonable opportunity of hearing.

The First Appellate Authority was directed to complete the exercise within three months of communication of the Tribunal’s order.

01Facts

The taxpayer, a chemicals trader, was assessed under Section 73 of the CGST Act, 2017 for, among other matters, availing and utilising ₹1,43,403.74 each as CGST and WBGST credit instead of claiming the corresponding credit under IGST.

¶ 3–5 · pp. 1–4

The adjudicating authority confirmed tax, interest and penalty; the First Appellate Authority modified the computation but upheld reversal of the credit, with interest and penalty, and also found ₹4,176 each in CGST and WBGST credit to be time-barred under Section 16(4).

¶ 3–5 · pp. 1–4

The taxpayer appealed to the Tribunal, contending that the incorrect tax-head entry was inadvertent and caused no revenue loss; it also relied on the insertion of Section 16(5) in respect of the ₹4,176 credit.

¶ 8–9 · pp. 4–6 · ¶ 12–14 · p. 6

02Issues

i.1. Whether credit inadvertently availed and utilised under the CGST and SGST heads instead of the IGST head constituted wrongly availed or utilised ITC attracting reversal, interest and penalty under Section 73

¶ 11 · pp. 6–7 · ¶ 14 · p. 7

ii.2. Whether Section 16(5) absolved the taxpayer of liability to reverse the ₹4,176 each claimed under CGST and SGST, which the First Appellate Authority had treated as inadmissible under Section 16(4)

¶ 12–13 · p. 6

03Law Applied

Section 73 of the CGST Act, 2017 applies where tax has not been paid or has been short-paid or erroneously refunded, or where ITC has been wrongly availed or utilised; Section 50 provides for interest on tax liability, and Section 16(5) was applied to the credit that had been found inadmissible under Section 16(4).

¶ 3, 11–14 · pp. 1, 6–7

The Tribunal relied on Rejimon Padickapparambil Alex v. Union of India, 2024 KHC OnLine 7215, and Kalleppuram Metals v. Union of India, 2024 SCC OnLine Ker 7751. Those decisions treated an inadvertent, technical misclassification of eligible ITC between tax heads, in the circumstances considered, as not amounting to wrongful availment or utilisation warranting Section 73 proceedings, particularly where there was no loss of revenue.

¶ 15–19 · pp. 6–9

Provisions in the judgment · 7 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 73 Section 50 Section 107 Section 16 Section 112

Integrated Goods and Services Tax Act, 2017 Section 73

West Bengal Goods And Services Tax Act, 2017 Section 73

04Reasoning

The Tribunal treated the ₹4,176 issue separately and held that, following insertion of Section 16(5), the taxpayer was absolved from reversing that amount.

¶ 13 · p. 6

On the larger credit issue, it considered the taxpayer’s claim that eligible IGST credit had been entered under the CGST and SGST heads by mistake, and applied the Kerala High Court authorities concerning inadvertent tax-head errors and the electronic credit ledger.

¶ 14–19 · pp. 6–9

It concluded that those judgments applied to the present dispute, but directed the First Appellate Authority to reconsider the appeal in their light rather than finally determining the taxpayer’s entitlement to the disputed credit.

¶ 20 · p. 9