IGST Credit in Electronic Ledger Can Be Utilised for CGST and SGST Liabilities and Vice Versa: Kerala HC [Read Order]
Kerala HC ruled that IGST credit in the electronic ledger can be utilised for CGST and SGST liabilities, and vice versa, setting aside tax orders
Electronic Ledger
Electronic Ledger
In a recent ruling, the Kerala High Court held that Input Tax Credit (ITC) available in the electronic credit ledger can be used across CGST, SGST, and IGST liabilities, with IGST credit being utilisable for CGST and SGST liabilities, and vice versa.
S & D Sales Marketing, represented by its proprietress, filed a writ petition challenging an order of the Deputy Commissioner of State Tax that disallowed ITC of Rs. 1,51,684 claimed for the financial year 2017-18. The order imposed tax, interest, and penalty on the petitioner.
The petitioner’s appeal before the Appellate Authority was also dismissed.
The petitioner’s counsel argued that ITC should be treated as a pooled fund available in the electronic credit ledger which could be used for settlement of liabilities under different tax heads and relied upon the Kerala High Court’s earlier decision in Rejimon Padickapparambil Alex v. Union of India.
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The Government Pleader opposed the petition, supporting the orders of disallowance.
The bench comprising Justice Bechu Kurian Thomas observed that the principle laid down in Rejimon Padickapparambil Alex governed the issue, where it was explained that ITC functions like a wallet with compartments for CGST, IGST, and SGST, but could be used interchangeably for liabilities under these heads. It was further observed that denying such utilisation was contrary to law and the impugned orders required reconsideration.
The court set aside both the determination order and the appellate order, and directed the Deputy Commissioner of State Tax to reconsider the matter in light of the principles laid down in Rejimon Padickapparambil Alex, after granting an opportunity of hearing to the petitioner. The Court ordered that the decision be made within three months. The writ petition was allowed.
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