Appeal Pending – High Court Declines Interference in ITC Dispute

Case Title: Grand Hyundai v. State Tax Officer & Anr.
Court: High Court of Kerala at Ernakulam
Petition No.: WP(C) No. 499 of 2025
Judgment Date: 08.01.2025
Category of Dispute: Input Tax Credit – Wrong availment & adjustment
Relevant Sections: Section 73 of CGST/SGST Act, Article 226 of the Constitution of India

Facts of the Case (Para 2, 4, 5)

• The petitioner, Grand Hyundai, challenged Exhibit P1 assessment order dated 09.08.2024 for AY 2019-20, which alleged excess utilization of ITC and raised liability under Section 73 of the CGST/SGST Act.

• An appeal (Exhibit P2) was filed before the Appellate Authority on 07.11.2024.

• The petitioner relied on Rejimon Padickapparambil Alex v. UOI (2024 KHC Online 7215), where it was held that the electronic credit ledger is like a wallet with compartments (IGST/CGST/SGST) and cross-utilization cannot be treated as wrongful availment of ITC.

Question in Consideration (Para 2, 4)

• Whether the High Court should set aside the assessment order despite a statutory appeal being pending.

• Whether the principle laid down in Rejimon Padickapparambil Alex applied squarely to this case.

Observations of the Court (Para 4, 5, 6)

• The Court noted that the petitioner has already filed an appeal on 07.11.2024, which is still pending before the Appellate Authority.

• In Exhibit P4 judgment, the Court had set aside an assessment order even during pendency of appeal due to inordinate delay (8 months) in deciding the appeal.

• In this case, however, the appeal was filed only recently, and thus it is appropriate for the Appellate Authority to adjudicate first.

• The Court emphasized that the petitioner would not suffer prejudice, as the Appellate Authority can consider the applicability of the Rejimon Padickapparambil Alex case.

Judgment of the Court (Para 6)

• The High Court refused to interfere under Article 226 of the Constitution, citing the pending appeal.

• However, the Court directed the Appellate Authority to dispose of the appeal within 4 weeks, ensuring that the petitioner’s grievance is considered expeditiously.

• The authority was directed to specifically consider the impact of the Rejimon Padickapparambil Alex ruling while deciding the appeal.

Between Fine Lines (Simplified Summary in 5 Lines)

1. The assessee was accused of wrongly utilizing ITC and faced demand under Section 73.

2. A statutory appeal was already filed against the assessment order.

3. The High Court declined to interfere since an appeal remedy exists.

4. However, the Court ordered the appeal to be decided within 4 weeks.

5. The authority must also consider the precedent on ITC ledger treatment.

Summary of Referred Cases

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