Proceedings under Section 73 of the CGST Act for denial of ITC and imposing interest and penalty on availment of Credit under wrong head not maintainable

Last updated: 05 February 2025

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The Kerala High Court has ruled that proceedings under Section 73 of the CGST Act, including interest and penalties, are not maintainable when Input Tax Credit (ITC) is availed under the wrong head (CGST/SGST instead of IGST). The court followed its previous judgment stating that if credit is available in IGST, claiming it under CGST and SGST is a technical mistake, not a wrongful availment. The electronic credit ledger is treated as a single pool of funds, and interest is only applicable if the total ITC balance falls below the wrongly availed amount.

Court :
Kerala High Court

Brief :
The Hon'ble Kerala High Court in Maruthengal Moideen& Ors. v. State Tax Officer & Ors. [W.P.(C) No. 20837 of 2024 dated January 13, 2025] quashed the order passed under Section 73 of the Central Goods and Services Tax Act, 2017 ("the CGST Act"), along with interest and penalty imposed for alleged violation of Section 16(2)(c) of the CGST Act, in case where the ITC was availed under wrong head i.e. availment of credit under the head of CGST and SGST instead of IGST interalia holding that, the benefit of the judgment of the Hon'ble Kerala High Court in the case of RejimonPadickapparambil Alex v. Union of India & Ors.[WA No. 54 of 2024 dated November 26, 2024] was available in the present case wherein it was held that that there can be no wrong availing of input tax credit when such credit, available in IGST, was availed under the heads CGST and SGST.

Citation :
W.P.(C) No. 20837 of 2024 dated January 13, 2025

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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