TMI Blog2022 (3) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order is passed, that is the reason, why, the Central Excise respondent revenue was able to appropriate the amount from the credit, that is, the electronic credit ledger of the petitioner. Therefore, since at no point of time, the ITC was either availed or utilised by the petitioner, that is, one of the pre-requisite under which only penalty can be imposed under Section 122(2)(a), such situation, since is not available in the present case, such kind of penalty cannot be imposed against the petitioner - thus, insofar as the demand of interest as well as the imposition of penalty is concerned, which is form part of the impugned order under Clause 3 and 4 of the operative portion, those demand made by the respondents or imposing penalty against the petitioner are untenable and therefore, that are liable to be interfered with. This writ petition is partly allowed. - W. P. (MD) No. 11113 of 2020 and W. M. P(MD). No. 9729 of 2020 - - - Dated:- 14-9-2021 - R. SURESH KUMAR J. B. Rooban for the petitioner. Mrs. S. Ragaventhre , Standing Counsel, for the respondents. ORDER The prayer sought for herein is for a Writ of Certiorari, to call for the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Central GST and Central Excise GSTR-3B filed for the month of May' 2019. The said transitional credit of ₹ 50,21,080/- was neither utilised nor refunded, but remained as excess credit till the date of reversal. In other words, the petitioner has never utilised the said CENVAT credit for discharging their output tax liability, but it simply remains as balance in the electronic credit ledger only. 6. While that being so, a show cause notice was issued by the respondent on 10.12.2019 to show cause, as to why the said transitional credit of ₹ 50,21,080/- should not be disallowed and adjusted towards the alleged demand, and why not interest under Section 50(3) shall be levied, and as to why not a penalty under Section 122(2)(a) of the CGST Act shall be levied. 7. The said show cause notice was issued under Section 73(1) of the CGST Act. Insofar as the said show cause notice, the petitioner has given his reply and objections on 04.02.2020. However, without Tvl. Kumaran Filaments (P) Ltd. v. Commissioner of Central GST and Central Excise considering or accepting the said reply given by the petitioner, the respondent proceeded to pass assessment order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 50,21,080/- is concerned, and a consequential appropriation of the said credit towards the demand made in this regard, is concerned, the petitioner has given up his challenge, therefore, those aspects need not be gone into. 12. However, insofar as the demand of interest is concerned, learned counsel would submit that, the demand of interest, on the alleged tax due is concerned, need not arise in this case, because, the entire tax due or demand, had been appropriated from the credit of the petitioner from the electronic ledger to the extend of ₹ 50,21,080/- as that amount have been made available in the credit of the petitioner for the whole period, that is, from first quarter of 2017, that is, well before the GST regime come into effect. Tvl. Kumaran Filaments (P) Ltd. v. Commissioner of Central GST and Central Excise 13. When that being so, whether the respondents' demand interest is concerned, the learned counsel would contend that, this issue has been considered by this Court in a batch of writ petitions, and accordingly, it has been decided in favour of the tax payer. 14. In this context, the learned counsel for the petitioner relied upon a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 18.04.2019. The aforesaid decision is dated 18.04.2019 long prior to the clarifications issued by the GST Council. I have also in my decision in the case of Refix Industry (supra) noted this position at para 16 thereof. 15. Therefore, the learned counsel would contend that the issue has been concluded, that no such demand of interest could be made in the present case, in view of the factual position, where, the entire tax demand has been appropriated from the credit of the petitioner. 16. Insofar as the imposing of penalty under Section 122 (2) (a) Tvl. Kumaran Filaments (P) Ltd. v. Commissioner of Central GST and Central Excise of the CGST Act, is concerned, learned counsel, by relying upon the said Section, has vehemently contended that, if at all, the petitioner has wrongly availed or utilised any ITC, then only, the petitioner is liable to be penalised by imposing a penalty under Section 122(2), here, in the case on hand, the petitioner has never availed or utilised the ITC, therefore, as per the language used under Section 122(2), such kind of penalty also cannot be imposed against the petitioner, therefore, that portion of the impugned order is also vitiated, hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the impugned order is also sustainable, she contended. 21. I have considered the said rival submissions made by the learned counsel appearing for the parties and have perused the materials Tvl. Kumaran Filaments (P) Ltd. v. Commissioner of Central GST and Central Excise placed before this Court. 22. In the operative portion of the impugned order, the following has been stated by the respondents. (i) I disallow the credit of ₹ 50,21,080/- (Rupees Fifty Lakh Twenty One Thousand and Eighty Only) carried forward through form GST Tran-1 by M/s Kumaran Filaments (P) Ltd., and demand the same from them in terms of Section 73(1) of CGST Act, 2017 read with Rules 121 and 142 (1)(a) of CGST Rules, 2017 and Section 174 of the CGST Act, 2017. (ii) I appropriate the Credit of ₹ 50,21,080/- (Rupees Fifty Lakh Twenty One Thousand and Eighty Only) reversed on 20.06.2019 for the demand under (I). (iii) I demand Interest at the appropriate rate as applicable from them for taking ineligible Transitional credit in terms of Section 73(1) as Tvl. Kumaran Filaments (P) Ltd. v. Commissioner of Central GST and Central Excise determined under Section 50(3) of the CGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 1) and also a Division Bench of this Court in Commissioner of Central Excise, Puducherry-I, v. CESTAT, Chennai , 2017 (346 ELT 80) and also some other decisions, have held that, insofar as the appropriation of the tax demand from the credit is concerned, it cannot carry any interest, therefore, demanding any interest, in the words of the Division Bench is nothing but the Department act like shylock demanding a pound of flesh. 27. If we apply the said principle made in those cases, as has been quoted hereinabove, which is part of Maansarovar Motors Pvt., Ltd., case certainly, that would carry forward the plea of the petitioner as against the demand of interest in the impugned order. Insofar as the Tvl. Kumaran Filaments (P) Ltd. v. Commissioner of Central GST and Central Excise imposition of penalty is concerned, the relevant Section is 122(2). The language used in 122(2) reads as follows: (2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,- (a) for any reason, other than the reason of fraud or any wilful miss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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