A court case involving a registered taxpayer who mistakenly availed excess Input Tax Credit (ITC) but reversed it before receiving a show cause notice. The authorities demanded interest and penalty on the excess ITC, but the court ruled in favor of the taxpayer.

Key Points:

• The taxpayer accidentally claimed excess ITC due to a filing error.
• The excess ITC was reversed by debiting the electronic credit ledger before a show cause notice was issued.
• The court determined that interest can only be charged on ITC that is both availed and utilized.
• Issuing a notice in Form GST DRC-01A doesn't automatically initiate proceedings under Section 73 of the Act.
• The taxpayer's actions were deemed compliant, and the levied interest and penalty were quashed.

Case Breakdown:

1. The taxpayer mistakenly claimed excess ITC.
2. They reversed the excess ITC by debiting their electronic credit ledger.
3. Despite the reversal, authorities demanded interest and penalty.
4. The taxpayer challenged this demand in court.
5. The court ruled that interest can only be charged on utilized ITC.
6. Since the reversed ITC wasn't utilized, the interest and penalty were invalid.

GST Case Law Utpal Das Versus The State of West Bengal

Citation-2024 TAXONATION 2007 (CALCUTTA)

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