Order Date – 11 June 2024

Parties: M/s. Greenstar Fertilizers Limited Vs The Joint Commissioner (Appeals) and The Assistant Commissioner of GST and Central Excise

Facts – 

• The Petitioner, M/s. Greenstar Fertilizers Limited, 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.
• The petitioner has reversed a sum before the issuance of the show cause notice dated 26.07.2021. Under these circumstances, the second respondent had earlier confirmed the penalty and interest on the petitioner.

Issue – 

• Whether the imposition of penalty and interest are valid?

Order – 

• The Single Bench of Hon'ble High Court observed that the impugned order sustaining the penalty under Section 74(1) and 74(5) of the CGST Act is unsustainable. with almost an identical issue in Aathi Hotel, Rep. by its Proprietor S.Vaithiyanathan vs. Assistant Commissioner (ST) (FAC), 2021 SCC OnLine Mad 16170 it was held that “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.”
• Thus imposition of penalty under the peculiar facts and circumstances of the case is unjustified. However, 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.
• Writ Petition stands allowed.