Penalty imposed for wrongly availing Input Tax Credit but not utilized is unsustainable. Unjustified penalty waived, token penalty of Rs. 10,000 imposed.

The High Court examined the legality of penalty imposition u/s 74(1) and 74(5) of the CGST Act, 2017 for wrongly availed but unutilized Input Tax Credit. The petitioner reversed the amount post show cause notice issuance. Relying on a similar case, it was held that penalties u/s 73(1) and 74(1) apply only if the credit is both availed and utilized for tax payment. The court found the penalty unsustainable and suggested applying penalty u/s 122 of TNGST Act, 2017. Given the circumstances, a token penalty of Rs. 10,000 was imposed, and the petition was allowed. .....

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