No penalty despite inadmissible claim of transition credit by taxpayer to protect its interests

Tvl. Rashtriya Ispat Nigam Limited Vs Deputy Commissioner (CT) III (Madras High Court)

Coming to the imposition of penalty and levy of interest under the impugned order, I am of the view that sustaining the same would be hyper-technical. No doubt, the petitioner has made an inadmissible claim of transition. However, I have noticed earlier that it was a last ditch effort by a desperate assessee and I reiterate that view.

The counter of the respondent would support the delay for refund citing technical problems. Such technical problems are still ongoing and thus, the petitioner cannot be expected to wait indifferently for refund. While this is the position on the other hand, the extension of time for filing of TRAN 1 also had a date of cut-off, being 27.12.2017.

Thus, while the filing of a TRAN 1 is clearly misconceived, the petitioner is protected by the intention to protect its claim for refund in the face of the unjustified, and admitted delay on the part of the respondents. That apart, the provisions of Section 74 would be applicable only in the case of wrongful availment/utilization of ITC by reason of fraud. The pre­condition for invocation of Section 74 is that the revenue must establish willful misstatement or suppression to evade tax.

In the present case, the question evasion of tax does not arise since it is not an assessment but only determination of the correctness of availment of ITC. In such a case, what would be relevant is to see whether the availment of credit is with the intent of evading tax.

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