22/05/2025
Kerala High Court: No Penalty for Clerical ITC Misreporting if No Revenue Loss
In MJBR Marketing and Financial Services Pvt. Ltd. vs. Union of India [2025-VIL-421-KER], the Kerala High Court ruled that no penalty or tax demand can be imposed for mistakenly utilizing CGST/SGST ITC under the IGST head, as long as there’s no actual loss to the government.
Key Highlights:
• The error occurred due to no revision option in GSTR-3B and was revenue-neutral.
• The Court relied on CBIC Circular No. 192/04/2023 and its own ruling in Rejimon Padickapparambil Alex.
• Held that the credit ledger is a unified wallet, and technical errors without fraud or short payment don’t trigger Section 73.
• Directed the department to issue a fresh order within two months.
• Clarified that Centre-State apportionment issues must be raised before the GST Council, not taxpayers.
Impact:
A major relief for honest taxpayers—clerical errors in ITC reporting won’t attract penalties if there’s no tax evasion or revenue loss.
