Aathi Hotel Vs Assistant Commissioner (ST) (FAC) (Madras High Court)
No interest and penalty to be imposed if credit is merely availed but not utilised | Section 73 & 74 Interest will be attracted only if wrong/excess ITC availed & utilized
The Hon’ble Madras High Court in Aathi Hotel v. Assistant Commissioner (ST) (FAC) [W.P.No.3474 of 2021 W.M.P.Nos.3980 & 3982 of 2021 dated December 08, 2021] has held that, the interest is to be attracted only where credit is not only availed but also utilised for discharging tax liabilities and if there is an attempt to wrongly avail the credit and utilise the same then the tax liability would arise.
Facts:
M/s. Aathi Hotel (“the Petitioner”) is an hotelier and had purchased certain capital goods in connection with the business. The Petitioner had filed Form GST TRAN-1 and claimed a transitional credit i.e. Input Tax Credit (“ITC”) of INR 3,86,271, of VAT paid on capital goods purchased for hotel business, with a view to set off future tax liability of its furniture business, which was actually not available to the Petitioner. The transitional credit availed by the Petitioner was never utilized.
In this regard, a Show Cause Notice (“SCN”) was issued to the Petitioner followed by summary Show Cause Notice (“Summary SCN”), for which, the Petitioner replied and admitted the mistake of availing the credit and reversed the transitional credit in the GST returns.
Consequently, the Revenue Department (“the Respondent”) passed an order (“the Impugned Order”) under Section 74 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), levying interest and imposing penalty on the Petitioner.
Being aggrieved, the Petitioner has challenged the Impugned Order.
Issue:
Whether the Petitioner is liable to pay interest and penalty for availment of ITC and not utilised?
Held:
The Hon’ble Madras High Court in W.P.No.3474 of 2021 W.M.P.Nos.3980 & 3982 of 2021 dated December 08, 2021 held as under:
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