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TMI Blog2024 (6) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... but also utilised for discharging the tax liability. The proper method would have been to levy penalty under Section 122 of TNGST Act, 2017.' The imposition of penalty under the peculiar facts and circumstances of the case is unjustified - considering the fact that the petitioner has availed input tax credit, which was not eligible to be availed, but could have resulted in wrong utilization of input tax credit, a token penalty of Rs. 10,000/- is imposed on the petitioner - petition allowed. - Hon'ble Mr. Justice C. Saravanan For the Petitioner : Mr. S. Ganesh For the Respondents : Mr. N. Dilipkumar Standing Counsel ORDER The petitioner has challenged the impugned order passed by the first respondent in A.No.21/2022-GST, dated 17.08.2022. 2 . By the impugned order, the appeal filed by the petitioner against the order of the second respondent in Order-in-Original No.OIO.No. 02/2021-GST in GEXCOM/ADJN/GST/374/2021 O-CGST-DVN-TTN dated 31.12.2021 (Corrigendum dated 24.03.2022 in GEXCOM/ADJN/GST/374/2021 O-GST-DVN-TTN) has been rejected. 3 . By the aforesaid Order-in-Original No.OIO.No.02/2021-GST in GEXCOM/ADJN/GST/374/2021 O-CGST-DVN-TTN dated 31.12.2021, the proposals cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CGST Act, 2017 read with Rule 121 of the CGST Rules, 2017, iii) I drop the demand for an amount of Rs. 2,59.349/- (Rupees two lakh fifty nine thousand three hundred and forty nine only) from M/s Greenstar Fertilizers Ltd, Tuticorin in view of the Invoices submitted by them to substantiate their eligibility for availing transitional credit as explained in Para 10 above. iv) I demand an amount of Rs. 2,91,467/- (Rupees two lakh ninety one thousand four hundred and sixty seven only) from M/s Greenstar Fertilizers Ltd, Tuticorin, mentioned in Para 11 above, being the amount of ineligible transitional credit availed and carried forward in 7A of Table 7(a) in Tran-1 Return in excess of credit available as per the prescribed documents, under Section 74(1) of the CGST Act, 2017 read with Rule 121 of the CGST Rules, 2017; v) I demand an amount of Rs. 11,27,932/- (Rupees eleven lakh twenty seven thousand nine hundred and thirty two only) from M/s Greenstar Fertilizers Ltd, Tuticorin, mentioned in Para 12 above, being the amount of ineligible transitional credit availed and carried forward in 7A of Table 7(a) in Tran-1 Return by willful misstatement showing capital goods as inputs, under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(5) of the Central Goods and Services Tax Act, 2017 and under Rule 121 of the Central Goods and Services Tax Rules, and sustained by the 1st Respondent suffers from patent error. ii) The Respondents have failed to consider that, the Petitioner has reversed the input tax credit shown in the Electronic Credit Ledger, and in such circumstances, the levy of penalty is unwarranted. iii) The Respondents ought not to have levied penalty, as from the date of Claim of Input Tax Credit through TRANS-1, till the date of reversal, the balance of Electronic Credit Ledger stayed above the disputed amount. iv) The Respondents ought not to have imposed penalty as there is no actual loss to the Revenue. v) Where input tax credit was reversed from Electronic Credit Ledger and the balance remained unutilised, since the date of claim of Input Tax Credit in Electronic Credit Ledger, and at no point of time, the Input Tax Credit was either availed or utilized and therefore ,penalty can be imposed. vi) The Plain reading of Section 74 makes it clear that there must be a revenue loss to the Government on account of the Act of the Assessee. The Term 'Input Tax Credit' availed or utilised implies th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, the learned Senior Standing Counsel for the respondents would further submit that the impugned order of the first respondent upholding the levy of penalty under Section 74(1) and 74(5) of the CGST Act is well reasoned and do not require any interference. 11 . The learned Senior Standing Counsel for the respondents would further submit that irrespective of the fact whether the credit was used/utilized or merely availed, the language in Section 74(1) and 74(5) of the CGST Act make it clear that the penalty has to be levied at the rate prescribed under these provisions. 12 . Specifically, the learned Senior Standing Counsel for the respondents would submit that under Section 74(1) of the CGST Act, it has been clearly stated that the word used is credit has been wrongly availed or utilized by reason of fraud or any wilful misstatement or suppression of facts with an intention to evade tax. Therefore, irrespective of the fact whether the credit was utilized or not, the petitioner is liable to penalty under Section 74(1) and 74 (5) of the respective GST Act. It is therefore, submitted that the Writ Petition is liable to be dismissed. 13 . In support of his submissions, the learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongly read it down without properly appreciating the scope and limitation thereof. A statutory provision is generally read down in order to save the said provision from being declared unconstitutional or illegal. Rule 14 specifically provides that where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest would be recovered from the manufacturer or the provider of the output service. The issue is as to whether the aforesaid word Or appearing in Rule 14, twice, could be read as AND by way of reading it down as has been done by the High Court. If the aforesaid provision is read as a whole we find no reason to read the word OR in between the expressions taken or utilized wrongly or has been erroneously refunded as the word AND . On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest'' 19. The ratio in the above case is to be distinguished on facts as in the present case although credit was wrongly attempted to be transitioned, it was never utilized. Further before levying penalty or interest, a proper excise was required to be made by a proper officer under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to recover such tax together with levy of interest and penalty under section 50 but until such time that the statutory authority is able to demonstrate that any tax was recoverable from the petitioner, a reflection in the electronic credit ledger cannot be treated as an availment . 33. The judgment of the Supreme Court rendered in the case of Ind-swift Laboratories Ltd. [2011] 40 VST 1 (SC) ; [2011] 7 GSTR 348 (SC) ; (2011) 4 SCC 635 is an expression on situation where such credit has been utilized by a dealer and it is in such circumstances that the Supreme Court bearing note on the adjudication done by Settlement Commission, has recorded its opinion. 34. In so far as the present case is concerned, annexure 2 series confirms that the petitioner has an input-tax credit in his favour under the Value Added tax Act and the Entry tax Act. Now whether he is entitled for refund of this credit or entitled to carry it forward in the transitional credit, may be a subject-matter of proceeding pending before the statutory authority but nonetheless, it is definitely a confirmation of the fact that there is no tax outstanding against the petitioner which is recoverable.'' 18 . Under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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