2023 (12) TMI 72 - HC - GST

Tax Credit Appeal Allowed: Petitioner Granted Four-Week Window to Challenge Penalty Under Section 107 of CGST Act

S. Mahendrakumar Devichand Versus The Union of India & Ors.

HC resolved tax credit dispute by permitting petitioner to file appeal under Section 107 of CGST Act within four weeks. Respondents directed to refund ... Maintainability of petition - availability of alternative remedy - waiver of demand alongwith interest and penalty u/s 74 of the CGST Act, 2017 - penalty u/s 122(1)(vii) of the CGST Act, 2017 confirmed - HELD THAT:- Learned counsel for the parties are ad-idem that a statutory remedy of an appeal is available to the petitioner to assail the aforesaid order passed by the adjudicating officer, as provided under Section 107 of the CGST Act - petitioner would submit that the effect of the order-in-original is that the amounts would be now required to be refunded to the petitioner being the amount of input tax credit paid by the petitioner - Respondent would not dispute such consequences which would fall from the order passed by the adjudicating officer. It is stated by the petitioner that they intend to challenge the penalty of Rs. 20,63,46,994/- imposed by the said order passed by the adjudicating officer. Considering the subsequent developments, further adjudication of the present proceedings is not called for. The petition can be disposed of by permitting the petitioner to avail the alternate remedy of an appeal to assail the order-in-original dated 17 November, 2023. Issues involved:The issues involved in the judgment are related to the demand of inadmissible input tax credit under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act), imposition of penalties, dropping of demands, and the statutory remedy of appeal available to the petitioner.Demand of Inadmissible Input Tax Credit:The adjudicating officer passed an order dropping the demand against the petitioner for inadmissible input tax credit amounting to Rs. 20,63,46,994 under Section 74 of the CGST Act. The penalty under Section 74 was also dropped, but a penalty of the same amount was imposed under Section 122(1)(vii) of the CGST Act. The order directed the appropriation of the penalty amount from the total amount paid by the petitioner.Statutory Remedy of Appeal:Both counsels agreed that the petitioner has the statutory remedy of an appeal under Section 107 of the CGST Act to challenge the order-in-original. The petitioner intended to challenge the penalty imposed by the adjudicating officer. The High Court decided that further adjudication was not necessary, and the petitioner was permitted to file an appeal within four weeks from the date of the judgment.Order of the High Court:The High Court ordered that the respondents should not take any coercive action for four weeks based on the adjudicating officer's order. The respondents were directed to refund appropriate amounts to the petitioner after retaining 10% of the penalty amount for filing the statutory appeal. The refund was to be made within four weeks, and the petitioner was not required to make any further deposit. The High Court also allowed the petitioner to claim interest on the deposit of input tax credit in the appellate proceedings.Conclusion:The High Court disposed of the petition by allowing the petitioner to file an appeal against the order-in-original. The respondents were directed to refund the appropriate amounts to the petitioner, retaining a portion for the statutory appeal. The High Court kept all contentions of the parties on the appellate proceedings open and permitted the petitioner to claim interest on the deposit of input tax credit in the appeal. No costs were awarded in this matter.