Jayasri Traders Vs Assistant Commissioner (ST) (Madras High Court)
ITC availed on car purchase and paid subsequently: HC directs reconsideration of 100% Penalty order
In recent judicial proceedings before the Madras High Court, the case of Jayasri Traders vs. Assistant Commissioner revolves around the imposition of penalties concerning Input Tax Credit (ITC) availed on a car purchase under GST regulations. The petitioner contested an order dated 28.06.2023, arguing that despite voluntary payment of tax dues before the issuance of the impugned order, a 100% penalty was imposed.
Detailed Analysis
The dispute originated from the petitioner, Jayasri Traders, availing Input Tax Credit (ITC) for a car purchase, which subsequently was found to be ineligible under GST rules. Upon realization of the error, the petitioner promptly paid the tax dues under Form GST DRC 03 on 12.09.2023, prior to the issuance of the impugned order. Despite this, the Assistant Commissioner imposed a 100% penalty under Section 74 of the GST Act, prompting the petitioner to challenge the order before the Madras High Court.
Legal Arguments
Learned counsel for the petitioner contended that the imposition of a 100% penalty was unjustified in light of the voluntary payment of tax dues before the issuance of the impugned order. The counsel argued that principles of natural justice were compromised as the penalty was levied without proper reasoning under Section 74 of the GST Act. Additionally, the petitioner cited a circular by the Central Board of Indirect Taxes and Customs (CBIC), suggesting that interest should not be levied in such cases where tax dues have been paid in full.
