2026-VIL-181-GSTAT-BLR
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SGST Tribunal

GST - Adjustment of excess IGST paid against CGST and SGST liability - Sections 39, 49 and 54 of CGST Act, 2017 and Rule 92 of CGST Rules, 2017 - Respondent initially added the tax on credit notes received to the output tax liability instead of reversing input tax credit, then in a later month reversed the credit and adjusted the excess IGST paid against its CGST and SGST liability on its own in GSTR-3B, without claiming refund - Audit alleged short payment, and the adjudicating authority confirmed the demand with interest and penalty under Section 73 - FAA set aside the demand, and the Department appealed - Whether the Respondent was right in utilising the excess IGST of one tax period against the liability of CGST and SGST of the following tax period - HELD - During July 2017 to March 2018 there was no provision under the Act or Rules requiring the recipient to reduce input tax credit on account of credit notes. The Respondent reported only the net figures in GSTR-3B for the month in which the error was noticed, which is the manner clarified in Para 4 of the Circular No. 26/26/2017-GST - The Respondent had not claimed refund of the excess IGST or retained it for adjustment against IGST liability of subsequent months. Had refund been claimed, the amount would have been restored to the electronic credit ledger under Rule 92 as IGST credit, and such credit could be utilised towards CGST and SGST under Section 49(5) - The only issue was that the procedure for refund and re-credit was not followed. The decisions relied upon by the Respondent, which dealt with tax paid under a wrong head, were found not to apply directly, as this was a case of utilisation of excess IGST against CGST and SGST. The principle that an assessee should not suffer for technical errors where there is no loss of revenue, however, supports the Respondent. The initial payment and subsequent reversal showed a bona fide act, and the adjustment was done suo motu after noticing the excess payment. The adjustment led to no revenue loss and was only a procedural infraction - A bona fide and inadvertent errors deserve a lenient view, particularly in the first year of GST implementation, a lenient view is taken - No interference is called for in the order of the First Appellate Authority. The demand of tax, interest and penalty confirmed by the adjudicating authority is set aside - The appeal of the Department is dismissed
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