The Dispute:

• Greenstar Fertilizers Ltd. (petitioner) transitioned certain amounts as input tax credit (ITC) under the CGST Act during the rollout of the Goods and Services Tax (GST).
• The authorities (respondents) issued a show-cause notice alleging the ITC was ineligible and demanded reversal along with interest and penalties.
• Greenstar Fertilizers reversed a portion of the disputed ITC before the final order.

Petitioner's Contentions:

• The reversed ITC amount should not attract penalties as it was a genuine mistake.
• Penalties should not be imposed since there was no actual loss of revenue to the government.

Authorities' Arguments:

• Greenstar Fertilizers wrongly availed of the ITC, justifying penalty imposition under Section 74 of the CGST Act.
• The petitioner's actions, regardless of utilization, violate the Act.

Court's Decision:

• The court ruled in favor of Greenstar Fertilizers, citing similar past judgments.
• The court clarified that penalties under Section 74 apply only when the ITC is "availed or utilized."
• A token penalty of Rs. 10,000/- was imposed considering the initial ineligible credit claim.

Case Law-Greenstar Fertilizers Limited Versus The Joint Commissioner (Appeals)

Citation-2024 TAXONATION 1259 (MADRAS)

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