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2023 (10) TMI 854 - PUNJAB AND HARYANA HIGH COURTLevy of interest - Utilisation of amount of Rs. 21,13,354/- from the excess Input Tax Credit (ITC) taken - imposition of equal penalty. Whether the petitioner was proved to have utilized an amount of Rs. 21,13,354/- out of the amount which was entered out of the excess ITC amount to the tune of Rs. 12,65,20,827/- in its electronic credit ledger as observed by respondent No. 4? HELD THAT:- From a purposeful reading of the provisions underlying Section 50 of the CGST Act, the legislation intent that stands reflected is that where an ITC/cenvat credit is wrongfully reflected in electronic ledger, the same itself is not sufficient to draw penal proceedings until the same or any part of such ITC is put to use so as to become recoverable and if such cenvat credit is reversed before utilization, then even the demand of interest and penalty cannot be said to be tenable. In this regard, we place reliance upon Jagatjit Industries Ltd.’s case [2010 (12) TMI 765 - PUNJAB & HARYANA HIGH COURT], wherein a Bench of this Court had held that where the cenvat credit was wrongly availed and was reversed before utilizing the same, there was no justification for demand of interest and upon Grasim Bhiwani Textile Ltd.’s case [2018 (6) TMI 43 - PUNJAB AND HARYANA HIGH COURT], wherein a Coordinate Bench of this Court was dealing with a similar question in a case under Central Excise Act, 1944. The assessee had been availing credit of service tax paid on input service. On a perusal of Annexure P-5 which is extract of electronic credit ledger during the period from August 2017 till December 2018, it is revealed that an amount of Rs. 14,05,78,663/- was entered as amount of ITC accrued through inputs as in August 2017. As on that date, an amount of Rs. 81,95,564/- was already lying as balance ITC. It is also revealed that during the month of August 2017, the petitioner had central tax liability of Rs. 1,61,71,190/- which it discharged using its ITC and thereafter a balance of Rs. 13,26,03,037/- was reflected as balance ITC during the month of August 2017. Meaning thereby that the petitioner did not utilize the excess ITC of Rs. 12,65,20,827/- during the month of August 2017. Similarly, till August 2018, the balance of ITC available in the electronic credit ledger of the petitioner was never below the sum of Rs. 12,65,20,827/- which shows that till August 2018 when the petitioner reversed the excess ITC amount, it had never utilized the same. Once it was proved that the amount of excess ITC though entered in the ledger in excess, was never utilized by the petitioner and since it was reversed prior to utilizing, therefore, in view of the ratio of law as laid down in Jagatjit Industries Ltd.’s case, Grasim Bhiwani Textile Ltd.’s case, the demand of interest as well as penalty was not at all tenable and the petitioner could not be burdened with the same. The impugned order dated 29.04.2022 is set aside and it is held that the petitioner was not liable to pay the amount of interest or penalty on the excess ITC wrongly entered by it in its electronic credit ledger for the relevant period - Appeal allowed.
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