GST Circular Trading: Penalty Equal to Full ITC Passed On, Not Limited to ₹10,000

Tvl.SAM Enterprises Vs Commercial Tax Officer (Madras High Court) The Madras High Court dismissed writ petitions filed by multiple medical equipment suppliers accused of circular trading and upheld penalties imposed under Sections 122(1)(ii) and 122(1)(vii) of the CGST Act. The Revenue found that 96.6% to 100% of the entities’ transactions were circular trading transactions carried out without actual movement of goods, allegedly to inflate turnover and obtain bank loans. The petitioners argued that penalties under Section 122(1) should be capped at Rs.10,000 and relied on the doctrine of pro...