ASHOK DRUGS (WHOLESALE) v. DEPUTY STATE TAX OFFICER & ORS.

Introduction

This judgment of the Kerala High Court is an important ruling on the scope of proceedings under Section 73 of the CGST Act and the distinction between wrong availment of Input Tax Credit (ITC) and mere erroneous classification of ITC under an incorrect tax head. The Court held that where a registered person inadvertently claims available ITC under the wrong head (such as claiming IGST credit instead of CGST credit) without causing any loss of revenue, such an error does not amount to wrongful availment or utilization of ITC so as to attract proceedings under Section 73.

The Court reaffirmed the principle laid down in Rejimon Padikapprambil Alex v. Union of India & Others, holding that Section 73 can be invoked only in cases involving non-payment, short payment of tax, erroneous refund, or wrongful availment or utilization of ITC resulting in revenue implications. A mere accounting or classification error, without any revenue loss, falls outside the ambit of Section 73.