S & D Sales Marketing Vs Deputy Commissioner of State Tax

The petitioner, a registered taxpayer trading in rice and dairy products, filed a writ petition challenging an order of determination (Exhibit-P1) and the subsequent appellate order (Exhibit-P2). For the financial year 2017-18, the petitioner had availed Input Tax Credit (ITC) of ₹1,51,684 under the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) heads. The proper officer disallowed this credit, deeming it ineligible, and imposed tax, interest, and penalties. The appeal against this was dismissed.

The petitioner argued that the disallowance was incorrect, as they had utilized IGST credit for CGST and SGST liabilities. The petitioner's counsel contended that this issue is squarely covered by a previous decision of the High Court in the case of Rejimon Padickapparambil Alex v. Union of India and Others. That judgment established that the electronic credit ledger should be viewed as a single "pool of funds," and credits from one tax head (like IGST) can be used to settle liabilities under other heads (like CGST and SGST).

The court, after reviewing the arguments and the impugned orders, agreed that the matter required reconsideration in light of this precedent.

The court set aside both the order of determination (Exhibit-P1) and the appellate order (Exhibit-P2). It directed the 1st respondent to reconsider the matter in light of the principles laid down in Rejimon Padickapparambil Alex’s case. The authority must pass a new order after providing the petitioner with an opportunity for a hearing. This process is to be completed within three months.