HC directs Reconsideration of 100% Penalty on wrongly availed ITC for Car Purchase

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.

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