GST Appellate Tribunal Sets Aside ₹77,504 IGST Demand And ₹40,000 Penalty After Department Verifies Invoices And Payments

In brief

The question

1. Whether the remaining demand of ₹77,504 IGST and ₹522 each CGST and SGST was sustainable, given the Department’s verification of the ITC and the amounts already paid.

The court held

The Tribunal allowed the appeal, directed appropriation of the remaining ₹522 each under CGST and SGST from the amounts already paid, and set aside paragraphs 11(i)–(iii) of the Order-in-Appeal, granting consequential relief.

01Facts

Scrutiny of the appellant’s returns led to a demand for input tax credit (ITC) allegedly availed against invoices issued by suppliers who had not filed GSTR-3B returns.

p. 2

The original authority confirmed tax of ₹1,42,398, interest and a penalty of ₹40,000, while appropriating amounts already paid.

p. 2

On appeal, the Appellate Authority reduced the tax demand to ₹78,548, comprising ₹77,504 IGST and ₹522 each CGST and SGST, but sustained interest and the penalty.

p. 2

Before the Tribunal, the Department reported that verification supported the disputed ₹77,504 IGST credit, confirmed that ₹10,792 each had been paid towards CGST and SGST but only ₹10,269 each had been appropriated, and accepted that the tax, interest and penalties were not sustainable.

p. 5

The appellant appealed against the remaining demands.

pp. 2–3

02Issues

i.1. Whether the remaining demand of ₹77,504 IGST and ₹522 each CGST and SGST was sustainable, given the Department’s verification of the ITC and the amounts already paid.

pp. 3, 5–6

ii.2. Whether interest under Section 50(3) and penalties under Section 73(9) remained payable where the Department accepted that no tax remained due and that payment had been made within the period prescribed by Section 73(8).

pp. 3, 5–6

03Law Applied

Section 73(9) of the CGST/KSGST Act, 2017 provides for determination of tax, interest and penalty in cases of tax not paid or short-paid, or ITC wrongly availed or utilised; Section 73(8) provides that no penalty is payable where the tax and interest are paid within thirty days of issuance of the show-cause notice.

pp. 2–3, 6

Section 50(3) governs interest on wrongly availed and utilised ITC, and Section 20 of the IGST Act applies relevant CGST provisions to integrated tax.

p. 2, 6

The Tribunal also proceeded on the verified factual position that no tax remained due and that the disputed ITC was supported by the invoices and the Chartered Accountant’s certificate.

p. 5

Provisions in the judgment · 6 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 16 Section 50 Section 73

KARNATAKA GOODS AND SERVICES TAX ACT, 2017 Section 50 Section 73

Integrated Goods and Services Tax Act, 2017 Section 20

04Reasoning

The Department’s verification confirmed that the documents supported the ₹77,504 IGST credit, and the Revenue conceded that the demand was unsustainable.

pp. 5–6

It also confirmed payment of ₹10,792 each towards CGST and SGST; because only ₹10,269 each had been appropriated in the original order, the Tribunal treated the remaining ₹522 each as a matter of incomplete appropriation, not an unpaid liability.

p. 6

As no tax remained due, the Tribunal held that the associated interest demand could not stand.

p. 6

It further accepted the Department’s position that the CGST and SGST penalties were barred by payment within the Section 73(8) period, and applied the same reasoning to the IGST penalty.

p. 6