The GST Appellate Tribunal (GSTAT), Lucknow, has dismissed an appeal concerning availment of Input Tax Credit (ITC) under incorrect tax heads, holding that the issue could not be interfered with in the absence of any new facts or records produced by the taxpayer.

The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) has observed that the First Appellate Authority determined the reversal of SGST of Rs. 177951.94 and CGST of Rs. 177951.94 as GST liability has been considered proper. The said reversal has also been thoroughly examined by us. Upon examination, the decision of the First Appellate Authority was found to be worthy of being upheld, because the appellant did not present before us any such fact on the basis of which the opinion of the First Appellate Authority could be interfered with.

Buy Now: E-Magazine: 1000+ Landmark GST Judgments (2017–2026)

The dispute arose from the availment of ITC for the period July 1, 2017 to March 31, 2018, where the taxpayer contended that the credit was substantively eligible but had inadvertently been reported under the CGST and SGST heads instead of IGST due to a technical/clerical error. The Tribunal, however, upheld the order of the First Appellate Authority to the extent that it sustained reversal of CGST and SGST credit and the consequential interest and penalty. 

The appellant/assessee is engaged in the wholesale and retail business of pesticides. A show cause notice was issued under Section 73 of the CGST/SGST Act alleging incorrect availment of ITC on account of a mismatch between the ITC reflected in GSTR-2A and the credit claimed in GSTR-3B.

The taxpayer’s central defence was that there was no wrongful availment of ITC in substance. According to the appellant, the corresponding credit was actually available as IGST credit and was reflected in GSTR-2A, but because of an inadvertent technical or clerical error, the credit was reported under the CGST and SGST heads in GSTR-3B.

The appellant consequently argued that the dispute concerned only the manner or tax head under which the credit was reported, rather than the substantive eligibility of the credit. It further submitted that there was no revenue loss to the Government because the credit was duly accounted for under the respective tax heads. 

The adjudicating authority had confirmed the demand along with applicable interest and penalty. The taxpayer thereafter preferred an appeal under Section 107 of the CGST Act.

The First Appellate Authority partly allowed the appeal and modified the original demand. Against the original demand of ₹11,40,593, comprising tax/ITC, interest and penalty, the first appellate authority sustained a total demand of ₹9,33,222, granting relief of ₹2,07,371. 

The principal dispute before the GSTAT was with respect to the balance demand sustained by the First Appellate Authority.

Before the Tribunal, the appellant specifically submitted that ₹3,77,640 of disputed ITC, which was reflected as IGST in GSTR-2A, had inadvertently been claimed under CGST and SGST in GSTR-3B because of a technical and clerical error.

The appellant maintained that there was no wrongful availment of ITC in substance; no excess utilisation of ITC; no intention to evade tax; no suppression of facts; and no loss of revenue to the Government.

According to the appellant, the substantive eligibility of the credit had not been disputed. The error was merely procedural and technical, and therefore the benefit of otherwise eligible ITC should not have been denied solely because it was reported under a different tax head. 

The taxpayer also challenged the invocation of Section 73, contending that the provision was not attracted because the discrepancy arose from an inadvertent reporting error rather than wrongful availment or utilisation of ITC.

The departmental representative opposed the appeal and submitted that availment of ITC under an incorrect tax head was not permissible under the statutory scheme.

The department’s position was that where there was a shortfall under one particular tax head, the taxpayer was required to discharge the liability under that head. Any excess payment or credit under another head could be dealt with separately by way of refund or another permissible statutory remedy.

On this basis, the department supported the order under challenge and sought dismissal of the appeal. 

The Tribunal recorded the findings of the First Appellate Authority concerning the ITC figures reported by the appellant.

For FY 2017-18, the taxpayer had claimed ITC of ₹78,22,334.06 in GSTR-3B, consisting of IGST – ₹4,55,780.18, CGST – ₹36,83,276.94, and SGST – ₹36,83,276.94

In comparison, the ITC claimed in GSTR-2A was recorded as ₹74,02,950, comprising: IGST – ₹3,92,300, CGST – ₹35,05,325, and SGST – ₹35,05,325

The resulting difference in the claimed ITC was recorded at ₹4,19,384.06, consisting of IGST ₹63,480.18 and CGST ₹1,77,951.94 and SGST ₹1,77,951.94. 

A significant part of the Tribunal’s reasoning concerned the IGST component.

The First Appellate Authority had recorded that the appellant had claimed IGST of ₹8,33,420.18 in GSTR-2A, while the IGST claimed in GSTR-3B was ₹4,55,780.18.

On this basis, the First Appellate Authority accepted that the IGST credit of ₹63,480.18, which had been reversed by the adjudicating authority, was allowable to the appellant.

The GSTAT examined this aspect and accepted the position recorded by the First Appellate Authority. Thus, the IGST-related ITC of ₹63,480.18 was allowed to the taxpayer. 

The Tribunal, however, took a different view regarding the balance CGST and SGST component.

The First Appellate Authority had determined that CGST of ₹1,77,951.94 and SGST of ₹1,77,951.94 was liable to be reversed. The GSTAT specifically examined this conclusion and found the decision of the First Appellate Authority to be worthy of being upheld.

The Tribunal noted that the appellant had not placed before it any additional fact or material on the basis of which the conclusion of the First Appellate Authority could be interfered with.

Consequently, the reversal of ₹3,55,903.88, representing CGST and SGST of ₹1,77,951.94 each, remained intact. 

The GSTAT concluded that the appellant’s challenge to the reversal of ITC could not succeed.

The Tribunal recorded that the First Appellate Authority had rightly reversed ITC of ₹3,72,121.34, comprising: CGST – ₹1,86,060.67 and SGST – ₹1,86,060.67.

The Tribunal accordingly endorsed the consequential penalty of ₹37,212.12 and interest of ₹5,23,888.54. 

The figures indicate that the amount ultimately sustained was substantially higher than the particular IGST component that the appellant claimed had merely been reported under the wrong tax head.

The appellant had relied upon decisions including a judgment of the Kerala High Court in Rejimon Padickapparambil Alex v. Union of India, decided on November 26, 2024, as well as the Kerala High Court decision in Padiken Silks.

The GSTAT, however, held that the precedents relied upon by the appellant were not relevant to the present dispute because the factual and legal contents of those cases were entirely different from the matter before the Tribunal.

Accordingly, the appellant could not derive support from those precedents. 

Another factor relied upon by the GSTAT was the absence of any new facts or records before the Division Bench.

The Tribunal observed that the appellant had not produced any new facts or records before it which could justify interference with the findings of the First Appellate Authority.

On the material available on record, the Bench therefore found no ground in favour of the appellant.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: US Finalises 123.04% Anti-Dumping Duty on Indian Solar Cells; Combined AD/CVD Burden Reaches 249.13%