TaxTMI 
TaxTMI 
2024 (6) TMI 667
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....appears to be a Central Excise Assessee under the provisions of the Central Excise Act, 1944 r/w. Central Excise Rules, 2002. With the implementation of GST with effect from 01.07.2017, the petitioner transitioned various amounts as input tax credit under Section 142 of the CGST Act, 2017, as detailed below. S.No. Particulars of wrong availment of Transitional Credit Amount availed (Rs.) Amount Reversed (Rs.) Date of reversal 1 Wrong availment of transitional credit on input held in stock on the premises located in Andhra Pradesh 9,46,567 9,46,567 08.12.2021 i.e., after issuance of SCN 2 Wrong availment of transitional credit in Trans-1 return without support of prescribed documents 6,67,649 2,87,630 1,20,670 08.12.2021 i.e., after issuance of SCN 09.12.2021 i.e., after issuance of SCN 3 Wrong availment of excess transitional credit than that available as per prescribed documents 2,91,467 2,91,467 08.12.2021 i.e., after issuance of SCN 4 Wrong availment of ineligible transitional credit on excise duty paid on capital goods by wrongly classifying them as inputs 11,27,932 11,27,932 16.12.2020 before issuance of SCN Total 30,33,615 27,74,266 &nbs....
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....with Rule 121 of the CGST Rules, 2017; vi) I appropriate the amounts of Rs. 9,46,567, Rs. 4,08,300, Rs. 2,91,467 and Rs. 11,27,932 mentioned at i), ii), iv) and v) above being the ineligible transitional credit reversed by the taxpayer vide DRC-03. vii) I also demand interest at appropriate rate under Section 50 of the CGST Act 2017 from M/s Greenstar Fertilizers Ltd, Tuticorin on the amounts of ineligible transitional credit availed and subsequently reversed on different dates as detailed above. viii) I impose a sum of Rs. 16,46,334/- (Rupees sixteen lakh forty six thousand three hundred and thirty four only) in connection with the demands at i), ii) and iv) above as penalty on M/s Greenstar Fertilizers Ltd, Tuticorin under Section 74(1) of the CGST, Act, 2017. ix) I also impose a sum of Rs. .1,69,190/- (Rupees one lakh sixty nine thousand one hundred and ninety only) in connection with the demand at v) above as penalty on M/s Greenstar Fertilizers Ltd. Tuticorin under Section 74(5) of the CGST. Act, 2017." 5. Aggrieved by the aforesaid order, the petitioner has filed an appeal in A.No.21/2022-GST before the first respondent, which has culminated in the impugned order, th....
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....x credit kept in Electronic Credit Ledger must be availed or utilised for payment of reduction in tax liability of the Assessee. In the present case the Petitioner has neither availed or utilised Input Tax Credit, for any reduction in tax liability as the same is reversed immediately after issuance of the Show Cause Notice. vii) All the issues are related to procedural errors which were unintentional and misunderstanding of the newly introduced Central Goods and Services Tax Act 2017, Act, during the initial period of its introduction. viii) The 1st Respondent while allowing the Appeal has partly set-aside the imposition of interest demanded under section 50 of the Central Goods and Services Tax Act 2017, however sustained the order of imposing penalty which is irrational, arbitrary and unreasonable. The 1st Respondent ought to have set-aside the imposition of penalty demanded, under Section 74 of the Central Goods and Services Tax Act 2017, applying the principles for setting aside the demand of interest under Section 50 of the Central Goods and Services Tax Act 2017. ix) Even the show cause notice dated 26-07-2021 issued by the 2nd Respondent is vague, and does not disclose....
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....r Standing Counsel for the respondents has relied on the following decisions of the Hon'ble Supreme Court:- (i) M/s.Gujarat Travancore Agency, Cochin vs. Commissioner of Income Tax, Kerala, Ernakulam [1989 (3) SCC 52] (ii) Punjab Tractors Ltd. vs. Commissioner of Central Excise, Chandigarh [2005 (11) SCC 210] 14. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 15. In my view, the impugned order sustaining the penalty under Section 74(1) and 74(5) of the CGST Act is unsustainable. Incidentally, I have dealt with almost an identical issue in Aathi Hotel, Rep. by its Proprietor S.Vaithiyanathan vs. Assistant Commissioner (ST) (FAC), 2021 SCC OnLine Mad 16170, wherein at Paragraph Nos.18 and 19, it has been held as under:- ''18. The Hon'ble Supreme Court in Union of India v. Ind-Swift Laboratories Limited, (2011) 4 SCC 635 while construing the provisions of erstwhile Cenvat Credit Rules 2002, held that wrong filing of credit rule attracts interest under the Provisions of the Cenvat Credit Rules 2002 read with Central Excise Act, 1944. There the credit was availed and ....
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....r officer under Section 74(10) after ascertaining whether the credit was wrongly availed and wrongly utilised. Though under Sections 73(1) and 74(1) of the Act, proceedings can be initiated for mere wrong availing of Input Tax Credit followed by imposition of interest penalty either under Section 73 or under Section 74 they stand attracted only where such credit was not only availed but also utilised for discharging the tax liability. The proper method would have been to levy penalty under Section 122 of TNGST Act, 2017.'' 16. Similar view was also taken by the Principal Bench of this Court in Kumaran Filaments (P) Ltd. vs. Commissioner of Central GST and Central Excise, Madurai and others, 2021 SCC OnLine Mad 12062, wherein at Paragraph No.29, it has been held as under:- ''29. However, the fact remains that, the petitioner has never utilised or availed the ITC wrongly. The entire amount has been in the credit till the impugned order is passed, that is the reason, why, the respondent-revenue was able to appropriate the amount from the credit, that is, the electronic credit ledger of the petitioner. Therefore, since at no point of time, the ITC was either availed ....