2026-VIL-304-MAD
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SGST High Court Cases

GST – Validity of denial of concessional tax rate on account of wrongful availment of input tax credit – Petitioner is engaged in transport of goods by vessel wrongly availed ITC and claimed the benefit of the concessional tax rate of 2.5% under Serial No.9(ii) and 10(ii) to the Notification No.11/2017-CGST (Rate) dated 28.06.2017 as amended by Notification No.01/2018-CGST (Rate) dated 25.04.2018 with effect from 25.01.2018 - Department denied the benefit of concessional rate of tax and imposed the regular rate of 18% tax along with interest and penalty - Whether the Department is justified in denying the concessional tax rate and imposing the higher tax liability on the ground that the petitioner wrongly availed ITC – HELD – The denial of benefit of Serial No.9(ii) and Serial No.10(ii) to Notification No.11/2017-CT (Rate) dated 28.06.2017 as amended by Notification No.01/2018-CGST (Rate) dated 25.04.2018 with effect from 25.01.2018, purely on account of the petitioner wrongly availing ITC on goods used for supplying the service namely transport of goods in a vessel and time charter of vessel for transport of goods, is not justified – The Show Cause Notice should have called upon the petitioner to show cause as to why the Input Tax Credit that was wrongly availed by the petitioner contrary to condition in the said Notifications and the petitioner should have been called to reverse the wrongly availed and utilized Input Tax Credit together with interest and penalty – Further, the denial of concessional rate of duty in terms of the aforesaid Notification cannot be justified as the authorities are not expected to impose a higher tax liability on the assessee merely due to an inadvertent mistake that may have been committed by an assessee. Thus, the denial of substantive benefit of rate Notification cannot be justified merely because Input Tax Credit was wrongly availed / utilized by the petitioner - The impugned order is quashed for determination of Input Tax Credit that was wrongly availed and utilised and determination of 100% penalty equivalent to such ITC that was wrongly availed and utilised by the petitioner. The respondents are directed to re-determine the petitioner's liability accordingly – The writ petition is partly allowed
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