2023 (7) TMI 1002 - HC - GST

Levy of Interest and penalty - the credit which was taken has been sanctioned - petitioner had also filed returns to transition the same credit - HELD THAT - Though the petitioner has an alternate remedy before the Appellate Commissioner, there is no disputing facts that the petitioner is entitled to Rs. 11,06,396/- on the eve of implementation of GST with effect from 01.07.2017. By the Sanction Order (Tran-1 Credit) dated 20.02.2023, the Superintendent of GST and Central Excise, Range-IIIB, Puducherry has confirmed that the petitioner is entitled to the aforesaid transitional credit - Therefore, merely because the petitioner had filed subsequent return and had given up the same would not mean that the petitioner can be subjected to pay interest and penalty. The difficulty arose only on account of technical glitches in the web portal maintained by the Central Government at the time of implementation of GST. The petitioner cannot be penalized as the credit itself was allowed after the implementation of GST by Sanction Order (Tran- 1 Credit) dated 20.02.2023. There are sufficient grounds to interfere with the impugned order. The impugned order seeking to impose interest and penalty on the petitioner is unsustainable. Therefore, the impugned order is liable to be quashed - petition allowed.

Summary

Issues:
The case involves difficulties faced by the petitioner in transitioning Input Tax Credit on capital goods during the implementation of GST. The dispute arose when the petitioner filed a revised return to claim Input Tax Credit, which was earlier sanctioned to the petitioner.

Summary:
The petitioner encountered challenges in transferring Input Tax Credit on capital goods during the introduction of GST on 01.07.2017. Despite efforts to communicate with the Department and officials, the petitioner faced issues in transitioning the credit properly. Subsequently, the petitioner decided to avail Input Tax Credit that could not be transitioned under Section 140 of the Central Goods and Services Tax Act, 2017, as confirmed by a Sanction Order (Tran-1 Credit) dated 20.02.2023. Following this, proceedings were initiated against the petitioner, leading to the impugned order.

The impugned order dated 28.03.2023 imposed penalty and interest on the petitioner under Section 50 and Section 73(9) read with Section 122(2)(a) of the CGST Act. The dispute centered around the petitioner filing a revised return based on decisions of the Bombay High Court and the Supreme Court to claim Input Tax Credit previously sanctioned by the Tran-1 Credit order.

The main issue for consideration was whether the petitioner could be penalized with interest and penalty despite the credit being sanctioned and the petitioner filing returns to transition the same credit. The court noted that the petitioner was entitled to transitional credit as confirmed by the Sanction Order dated 20.02.2023, amounting to Rs. 11,06,396.

The court held that technical glitches in the web portal during the GST implementation caused the petitioner's difficulties and should not result in penalties, especially since the credit was allowed post-GST implementation. Consequently, the impugned order imposing interest and penalty was deemed unsustainable and quashed, allowing the writ petition with no costs.