Important Case -Interest & Penalty not leviable on wrongly availed ITC, reversed without utilization

Important Judgment - Both, Interest & Penalty not leviable on wrongly availed ITC, reversed without utilization || CA (Adv) Bimal Jain

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🔥📛 Very Important GST Case on Input Tax Credit (ITC);

📢 No Penalty if ineligible ITC was availed and not utilised; Madras HC

➡️ The case involved a challenge to the levy of penalty under Section 74(1) and 74(5) of the CGST Act, 2017 for input tax credit wrongly claimed but not utilized and reversed after the issuance of a Show Cause Notice (SCN).

➡️ The revenue argued that penalty is applicable regardless of whether the credit was utilized or merely availed. However, the court ruled that Sections 73(1) and 74(1) of the CGST Act apply only when such credit was not only availed but also utilized for discharging the tax liability.

➡️ The court held that until it can be demonstrated that any tax was recoverable from the petitioner, a reflection in the electronic credit ledger cannot be treated as an "availment".

➡️ The court found that the imposition of penalty under the specific facts and circumstances of the case was unjustified. However, considering the petitioner had availed input tax credit, which was not eligible to be availed, a token penalty of Rs.10,000/- was imposed.

➡️ The Writ Petition was allowed, signifying that the court agreed with the petitioner's challenge to the levy of penalty.

✔️ MADRAS HC - M/s GREENSTAR FERTILIZERS LIMITED v. THE JOINT COMMISSIONER (APPEALS) [W.P.(MD)No.26254 of 2022]

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