Kerala HC Directs GST Department to Consider Rectification Application in FORM GST RFD-01 for Incorrect ITC Claims under CGST and SGST Instead of IGST [Read Order]

The High Court of Kerala has directed the Goods and Services ( GST ) Department to consider rectification application for Input Tax Credit ( ITC ) mistakenly claimed under incorrect heads of Central Goods and Service Tax ( CGST ) and State Goods and Service Tax ( SGST ) instead of claiming under the head Integrated Goods and Service Tax (IGST).

The petitioner, Divya S. R., inadvertently claimed the entire ITC of Rs.1,14,957 under the heads CGST and SGST in the monthly return for July 2017, despite having received IGST credit through interstate inward supply of goods. This unintentional error led to the issuance of an Assessment Order by the GST Department.

The petitioner, aggrieved by the Order, filed a rectification application in FORM GST RFD-01 under Rule 89(1)(A) of the Central Goods and Services Tax Rules, 2017.

The petitioner's rectification application remained unanswered, leading to the filing of a writ petition before the Kerala High Court.

The petitioner, Divya S.R., has approached the High Court of Kerala seeking a writ of mandamus directing the Assistant Tax Officer, the 6th respondent in the case, to set off the ITC of IGST amounting to Rs.1,14,957/-. The petitioner claims that this credit was wrongly claimed under CGST and SGST for the period July 2017 to March 2018 against the output tax liability of the petitioner for the same period.

The petitioner, represented by SreejI M.M and MadhusoodananNair.P contented that during the financial year 2017-18, they received IGST tax credit through interstate inward supply of goods, and an error occurred when filing the monthly return in GSTR 3B for July 2017. Instead of claiming the entire ITC under IGST, it was mistakenly claimed under CGST and SGST.

The petitioner argues for the consideration of the rectification application and emphasises that no decision has been taken on it to date.

The respondent revenue, represented by Smt. Jasmine M.M. acknowledges the filing date of the rectification application and agrees that the 6th respondent should consider the application in accordance with the law.

The bench highlighted the mistake made by the GST Department and directed it to consider the rectification application filed by the petitioner under Section 89(1)(A) of the CGST Rules.

The Kerala High Court held that rectification applications for ITC mistakenly claimed under CGST and SGST, instead of IGST, should be considered by the GST Department. The Court referred to Section 89(1)(A) of the CGST Rules, inserted through Notification No. 35/2021-Central Tax dated September 24, 2021, directing the Respondent to expeditiously process the rectification application as per Section 18 of the Integrated Goods and Services Tax Act, 2017.

The judgment further stipulated that the respondent revenue must provide an opportunity of hearing to the petitioner before issuing a final order on the rectification application. Until the final order is passed, the Court ruled that no coercive measures shall be taken against the petitioner for the realisation of the tax amount assessed in the Order.

In conclusion, the single bench of Justice Dinesh Kumar Singh disposed of the writ petition with a direction to the 6th respondent to promptly consider the rectification application filed by the petitioner and pass necessary orders expeditiously in accordance with the law.

The bench specifies that the petitioner should be given an opportunity for a hearing before a final order is passed on the rectification application. Additionally, the court orders that no coercive measures shall be taken against the petitioner for the realisation of the tax amount assessed in the assessment order until a final decision is made on the rectification application.

To Read the full text of the Order CLICK HERE

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