Utpal Das Vs State of West Bengal & Ors. (Calcutta High Court)
In a significant ruling, the Calcutta High Court addressed the issues of interest and penalty in the context of Input Tax Credit (ITC) in the case of Utpal Das Vs State of West Bengal & Ors. The judgment clarifies that interest and penalties cannot be demanded when ITC is wrongly availed but not utilized.
Background of the Case
The petitioner, Utpal Das, a registered taxpayer under the Central/West Bengal Goods and Services Tax Act, 2017, faced allegations of having availed excess ITC due to a clerical error in filing GSTR-09 for the tax period from April 2018 to March 2019. Upon receiving a notice dated February 22, 2021, the petitioner promptly acknowledged the mistake and took corrective action by debiting the excess ITC from his electronic credit ledger via Form GST DRC-03 on March 20, 2021.
Despite this rectification, a show cause notice was issued on March 23, 2021, under Section 73, imposing interest and penalty on the petitioner. The adjudicating authority upheld the demand for interest and penalty in its order dated April 8, 2021. The appellate authority subsequently affirmed this decision on May 13, 2022, stating that the proper officer acted within the legal framework.
Legal Arguments
During the hearing, the petitioner’s counsel, Mr. Mazumder, contended that the voluntary reversal of ITC via Form GST DRC-03 should have concluded the matter. He emphasized that since the ITC was not utilized, the levy of interest was unwarranted. The petitioner cited Section 50(3) of the Act, which specifies that interest can only be levied when the registered taxpayer has both availed and utilized the ITC.
