Interest can’t be demanded when amount of tax was available in credit ledger: HC

Case Details: Kumaran Filaments (P.) Ltd. v. Commissioner of Central GST & Central Excise - [2022] 138 taxmann.com 94 (Madras)

Judiciary and Counsel Details

• • R. Suresh Kumar, J.
  • B. Rooban for the Petitioner.
  • Mrs. S. Ragaventhre, Standing Counsel for the Respondent.

Facts of the Case

The petitioner had unavailed CENVAT credit of Rs. 50,21,080/- during the earlier regime. After the implementation of GST regime, the petitioner claimed the said unavailed CENVAT credit through TRAN-1, and the same had been carry forwarded to a new regime as Input Tax Credit. The department informed the petitioner that return in Form ER-1 was not filed by the petitioner and asked to immediately reverse the CENVAT credit. Subsequently, the petitioner submitted return in Form ER-1 and uploaded through online on ACES portal but rejected by portal due to the technical glitches. The department raised demand and interest & penalty were levied on the said credit. It filed writ petition against the levy of interest and penalty.

High Court Held

The Honorable High Court observed that the entire amount has been appropriated from the credit of the petitioner, which had been already reversed by the petitioner. Insofar as the amount of interest is concerned, the entire amount of credit was available in the credit of the petitioner for the whole period. Since, input tax credit was not utilised or availed wrongly, interest and penalty can’t be imposed. Therefore, it was held that demand of interest or penalty was not justified and, hence liable to be set aside.

List of Cases Reviewed

• • Maansarovar Motors (P.) Ltd. v. Assistant Commissioner [2020] 121 taxmann.com 135 (Mad.) (para 26) followed.

List of Cases Referred to

• • Maansarovar Motors (P.) Ltd. v. Assistant Commissioner [2020] 121 taxmann.com 135 (Mad.) (para 14)
  • CIT v. Anjum M.H. Ghaswala [2001] 119 Taxman 352/252 ITR 1 (SC) (para 26)
  • CCE v. CESTAT 2017 (346) ELT 80 (Mad.) (para 26).