GE T & D India Limited Vs Deputy Commissioner of GST & Central Excise (Madras High Court)
The case concerns a challenge to an Order-in-Original dated 13.10.2023, wherein part of the proposals in a Show Cause Notice seeking imposition of penalty under Section 11AC(1)(c) of the Central Excise Act, 1944 read with Section 122(2)(b) of the CGST Act, 2017 was confirmed. The authority confirmed a demand of ₹12,24,184 as Cenvat credit availed on written-off obsolete or slow-moving inputs, appropriated the amount already paid by the petitioner on 23.10.2019, dropped the interest demand, and imposed an equivalent penalty. The petitioner had reversed the proportionate input tax credit on 23.10.2019 and was issued a Show Cause Notice regarding the transition of this credit under the GST regime.
The impugned order records that interest was not leviable because the petitioner maintained sufficient credit balance until payment of the attributable Cenvat credit, as noted in paragraph 5.10. The issue before the Court was whether the writ petition was maintainable despite the alternate appellate remedy under Section 107 of the GST enactments and whether the penalty under Section 11AC(1)(c) read with Section 122(2)(b) was justified.
The Court referred to an earlier decision in Greenstar Fertilizers Limited, where it held that similar penalties were unjustified under the specific facts, though a token penalty was imposed in that case. It also noted consistent application of this view in Fairmacs Shipstores Private Limited, where the matter was remitted. Applying these principles, the Court observed that although the petitioner delayed reversing the credit related to obsolete or slow-moving inputs, no benefit had resulted from such delay, and the proportionate reversal had been duly made on 23.10.2019 based on entries in the trial balance.
