Gauhati HC: Recovery of ITC without Receipt of Goods Permissible, Penalty u/s 122 Contrary to CBIC Circular

Gauhati HC holds that ITC availed or utilised without receipt of goods or services may be recovered u/s 74 of CGST Act, 2017, along with interest u/s 50, but penalty under Section 122 cannot be imposed for the same act in view of CBIC Circular No. 171/03/2022-GST. The Department had issued a demand-cum-SCN proposing recovery of ITC allegedly availed on the basis of invoices and e-way bills from 17 suppliers without actual receipt of goods or services. However, the notice also proposed penalties u/s 122(1)(viii) and 122(2)(b). HC finds the proposed penalties to be in clear conflict with the Board's circular, which specifically clarifies that no penalty u/s 122 is imposable in such cases. Relying on the SC's decision in Commissioner of Customs v. Indian Oil Corporation, the HC reiterates that Board circular bind Revenue authorities and that a SCN contrary to an existing circular is void ab initio.

GM COKE JUDGEMENT.pdf