Case: M/S. Aathi Hotel v. The Assistant Commissioner and Ors.
Writ Petition under Article 226 of the Constitution of India
Purpose: Quashing of order passed by The Assistant Commissioner
Court: Madras High Court
Order passed on: 08.12.2022
The petitioner herein has filed a writ petition before the Hon’ble High Court seeking quashing of impugned order passed by the Assistant Commissioner on 06.02.2020 levying a penalty and interest on wrongly availing a transitional credit of Rs. 3,86,271.
He held that before levying penalty or interest, a proper excise was required to be made by a proper officer under Section 74(10) after ascertaining whether the credit was wrongly availed and wrongly utilised. The petitioner has duly acknowledged that he has wrongfully availed transitional credit but he hasn’t utilized the credit for discharging the tax liability.
Section 74(10) of the CGST Act, 2017, states that “The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund.”
Judgement: Since the petitioner hasn’t wrongly utilized the Credit, he is not liable to pay penalty. At the same time, since there was an attempt to wrongly avail credits and utilise the same as and when the tax liability would have arisen, the petitioner is held liable to a token penalty of Rs.10,000/-. The impugned order stands partly quashed.
