Penalty u/s 129 and 130, Section 17(5)(i)

[CHINTAPALLI MANIKANTA]

Dear Sir/Madam

Please respond to my query

Thanks in advance

After amendment of Section 129 now penalty is only needed to be paid for release of goods and conveyance - and tax is to be paid along with GSTR-3B. So 17(5)(i) says tax paid in accordance with Sec 74, 129, 130 - ITC is not available - so now 17(5)(i) is not applicable in case of sec 129? Means we can take ITC.

And in sec 130 the word tax is not there, nowhere said to pay tax - means 17(5)(i) doesn't apply here. If yes then why it sec 130 included in 17(5)(i).

Is my understanding correct.

AI Summary

Input Tax Credit availability: amendment treating detention penalty as non tax may permit ITC, affecting denial rules.
Amendment narrowed the transit detention/confiscation levy to a penalty or fine, distinct from tax on supply; therefore such penalty may fall outside the input tax credit denial, although where detention/confiscation leads to a separate tax demand under general assessment provisions the denial rule may still apply. Practitioners differ: some treat the provisions as interwoven so that subsequent tax demands trigger credit denial, while others view the penalty as non tax and thus not subject to the credit denial, subject to factual determination whether tax was in fact paid during enforcement.