2026-VIL-486-MAD
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SGST High Court Cases

GST - Penalty under Section 122(1) of the CGST Act, 2017, Waiver of pre-deposit of 10% of penalty under Section 107 - Petitioners were alleged to be involved in circular trading and have availed ineligible input tax credit – Imposition of penalty equivalent to the Input Tax Credit availed on circular trading – Petitioners contend that the maximum penalty that could have been imposed could only be restricted to Rs.10,000/- and the impugned orders imposing penalty under Section 122(1)(ii) and Section 122(1)(vii) is unjustified - Whether the penalties imposed on the petitioners under Sections 122(1)(ii) and 122(1)(vii) are justified or disproportionate – HELD - The language of Section 122(1) does not give any discretion to the Assessing Officer to levy lesser of the amount i.e., Rs.10,000/- as the expression used is “whichever is higher” - The impugned Orders cannot be found fault as adequate reasons have been given and shows application of mind by the Assessing Officers while passing the impugned Orders - The decisions relied upon by the Petitioners, which dealt with different statutory provisions, are distinguished as the present case is governed by the specific language of the GST Enactments. The impugned orders have adequately reasoned and recorded the Petitioners' involvement in circular trading and availing of ineligible input tax credit to boost their business turnover - The Petitioners cannot short-circuit the statutory appellate mechanism prescribed under the GST Enactments by directly approaching the High Court. The petitioners are granted liberty to file appeals before the Appellate Authority - Since pre-deposit of huge penalty as prescribed under Section 107 of the will cause undue hardship to the petitioners and make the appellate remedy illusory, the pre-deposit of 10% of penalty is dispensed with at the time of filing the appeals before the Appellate Authority - The writ petitions are dismissed with the liberty granted to the petitioners to file appeals before the Appellate Authority without pre-deposit of 10% of the penalty – Ordered accordingly
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GSTAT Appeal filed wrongly...
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