2026-VIL-225-GSTAT-ERN
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SGST Tribunal

GST - Denial of Input Tax Credit - Excess ITC alleged on comparison of GSTR-2A with GSTR-3B head-wise - Appellant, a super distributor of mobile phones, was issued an SCN under Section 73 alleging excess ITC availed for the year 2017-18, and the demand was confirmed and upheld by the FAA. The Appellant produced an undisputed reconciliation of the latest GSTR-2A and GSTR-9 figures together with IGST credit on import of goods, showing that overall ITC available exceeded the ITC availed, with a shortfall in CGST and SGST credit that was covered by surplus IGST credit - Whether excess availment of ITC can be determined on an aggregate basis by setting off the surplus IGST credit against the shortfall in CGST and SGST credit, so as to sustain a demand under Section 73 - HELD - The facts and figures of the reconciliation, including the IGST credit on imports, were not disputed or rebutted by the Respondent. Under Section 49(5)(a), IGST credit is first utilised towards IGST and the remaining amount may be utilised towards CGST and State tax, and it is therefore the vested right of the taxpayer to use surplus IGST credit to discharge any shortfall of CGST and SGST. Following the Kerala High Court decision, which approved the principle that the electronic credit ledger is a unified pool with compartments for IGST, CGST and SGST, and which has been followed in later decisions, the jurisdictional High Court ruling is binding in keeping with judicial discipline. The shortfall in CGST and SGST credit stood absorbed by the surplus IGST credit, so that the overall credit remained in excess. The contentions on Section 16(2)(c) and Section 155 are not relevant as the SCN contained no specific allegation on them, and apart from the alleged difference between GSTR-2A and GSTR-3B the SCN disclosed no cause of action - No case of short payment of tax is made out to invoke Section 73 - The demand is set aside and the appeal is allowed - Order confirming demand under Section 73 passed without personal hearing and non-speaking order of the FAA - Appellant contended that the adjudicating authority neither afforded a personal hearing nor considered the reply to the notice in Form ASMT-10, and that the FAA upheld the order without addressing this violation - Whether the adjudication order passed without hearing and the appellate order confirming it mechanically without discussing the contentions can be sustained - HELD - It is a matter of record that the adjudicating authority did not afford a hearing to the Appellant and did not discuss the contentions in the order, which is a unilateral recital of charges. The order is null and void on this ground alone as it is passed against the principles of natural justice. The FAA recorded the contentions of the Appellant, including those on facts not rebutted by the Respondent, but did not discuss or analyse any of them and confirmed the order mechanically. The order is a non-speaking order showing total non-application of mind, in gross violation of the principles of natural justice - The impugned order in appeal is set aside in its entirety, and the appeal is allowed.
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