Madras HC partly sets aside a section 74 order that imposed a higher tax liability of (18%) with interest and penalty on Assessee after denying concessional rate of duty (5%) on “transport of goods in vessel” and “time charter of

[17/04, 13:05] sekarreporter1: http://youtube.com/post/UgkxHhHKGydpRXJh-OqGUHqkzwdy82nlyI0n?si=oNPLRoFGsYa0zs01
[17/04, 13:05] sekarreporter1: Madras HC partly sets aside a section 74 order that imposed a higher tax liability of (18%) with interest and penalty on Assessee after denying concessional rate of duty (5%) on “transport of goods in vessel” and “time charter of vessels” under Notification No. 11/2017-CT (Rate), on account of Assessee wrongly availing and utilising ITC; Observing that Assessee initially paid 18% GST as per Serial No.10(ii) of the above Notification, and then started paying GST at 5% post-amendment to the above notification w.e.f January 25, 2018 while continuing the avail and utilize ITC benefit, HC following Supreme Court dicta in Unichem Laboratories, holds the following:- (i) “denial of concessional rate of duty in terms of the aforesaid Notification cannot be justified as the authorities under the statute are not expected to impose a higher tax liability on account of inadvertent mistake that may have been committed by an assessee.”, (ii) “the denial of substantive benefit of the above rate Notification also cannot be justified to impose a disproportionate liability under Section 74…merely because Input Tax Credit was wrongly availed / utilized by the petitioner.”, (iii) “it was no part of the duty of the Department to collect or to retain tax amount, which is not due to it or is legitimately due from the petitioner nor it was part of the duty of the Department to augment Revenue by depriving the benefit that was otherwise available to the petitioner”; Revenue alleged that Assessee wrongly availed ITC on inputs (e.g., lubricants, generators, components) while opting for concessional rate contrary to Serial No.10(ii) of Notification No.11/2017- CGST (Rate), thereby reclassifying services under residual entries taxable @18% in terms of Serial No.10(iii) of the same notification; Assessee contends that ITC was subsequently reversed and relied on Chandrapur Magnet Wires principle, whereas Revenue pointed out that reversal was belated (post adjudication); HC clarifies that Chandrapur decision applies only where ITC was wrongly availed and was reversed before its utilization; Therefore, applying the Chandrapur decision in the changed scenario of the present case where Assessee reversed the ITC amount post facto ie after order was passed, but without interest and penalty u/s 74, Court opines that Revenue ought to have issued SCN calling for reversal with interest and penalty; However, as the reversal part was done by Assessee, albeit after order, HC stresses that, not only “There is no concession from payment of interest” but the inbuilt amnesty u/s 74 in so far as payment of penalty is concerned is also not available, and therefore, Assessee is to pay 100% penalty equivalent to the ITC wrongly availed and utilised; However, noting that the whether the reversal made commensurates with the actual ITC wrongly availed and utilised still requires a proper determination, HC directs remands to determine this limited aspect of quantifying wrongly availed and utilised ITC, along with interest u/s 50 and penalty u/s 74