The mere reflection of transitional credit in the electronic ledger does not constitute 'availment' under the CGST Act, thus penalties imposed without actual utilization are unjustified.

ORDER

The petitioner has challenged the impugned order passed by the first respondent in A.No.21/2022-GST, dated 17.08.2022.

2. By the impugned order, the appeal filed by the petitioner against the order of the second respondent in Order-in-Original No.OIO.No. 02/2021-GST in GEXCOM/ADJN/GST/374/2021 O-CGST-DVN-TTN dated 31.12.2021 (Corrigendum dated 24.03.2022 in GEXCOM/ADJN/GST/374/2021 O-GST-DVN-TTN) has been rejected.

3. By the aforesaid Order-in-Original No.OIO.No.02/2021-GST in GEXCOM/ADJN/GST/374/2021 O-CGST-DVN-TTN dated 31.12.2021, the proposals contained in the show cause notice No.11/2021(AC), dated 26.07.2021, were confirmed. The petitioner appears to be a Central Excise Assessee under the provisions of the Central Excise Act, 1944 r/w. Central Excise Rules, 2002. With the implementation of GST with effect from 01.07.2017, the petitioner transitioned various amounts as input tax credit under Section 142 of the CGST Act, 2017, as detailed below.

4. The petitioner has reversed a sum of Rs.11,27,932/- before the issuance of the above mentioned show cause notice dated 26.07.2021. Under these circumstances, the second respondent had earlier confirmed the penalty and interest on the petitioner as under:-

“i) I demand an amount of Rs.9,46,567/- (Rupees nine lakh forty six thousand five hundred and sixty seven only) from M / s Greenstar Fertilizers Ltd, Tuticorin, mentioned in Para 9 above, being the amount of ineligible transitional credit availed and carried forward in 7A of Table 7(a) in Tran-? Return on inputs not held in stock in their registered place of business on the appointed day, under Section 74(1) of the CGST Act, 2017 read with Rule 121 of the CGST Rules, 2017;

ii) I demand an amount of Rs.4.08,300/- (Rupees four lakh eight thousand and three hundred only) from M/s Greenstar Fertilizers Ltd, Tuticorin, mentioned in Para 10 above, being the amount of ineligible transitional credit availed and carried forward in 7A of Table 7(a) in Tran-1 Return without the support of invoices or other prescribed documents evidencing the payment of duty, under Section 74(1) of the CGST Act, 2017 read with Rule 121 of the CGST Rules, 2017,

iii) I drop the demand for an amount of Rs.2,59.349/- (Rupees two lakh fifty nine thousand three hundred and forty nine only) from M/s Greenstar Fertilizers Ltd, Tuticorin in view of the Invoices submitted by them to substantiate their eligibility for availing transitional credit as explained in Para 10 above.

iv) I demand an amount of Rs.2,91,467/- (Rupees two lakh ninety one thousand four hundred and sixty seven only) from M/s Greenstar Fertilizers Ltd, Tuticorin, mentioned in Para 11 above, being the amount of ineligible transitional credit availed and carried forward in 7A of Table 7(a) in Tran-1 Return in excess of credit available as per the prescribed documents, under Section 74(1) of the CGST Act, 2017 read with Rule 121 of the CGST Rules, 2017;

v) I demand an amount of Rs.11,27,932/- (Rupees eleven lakh twenty seven thousand nine hundred and thirty two only) from M/s Greenstar Fertilizers Ltd, Tuticorin, mentioned in Para 12 above, being the amount of ineligible transitional credit availed