100% Penalty Imposed on Wrong ITC availment u/s 74 GST Act without Recording Reasons: Madras HC remands for Reconsideration on 10% Pre-deposit [Read More]

The Madras High Court ruled against a 100% GST penalty for erroneous Input Tax Credit (ITC) under Section 74 of the GST Act, citing inadequate reasoning. Jayasri Traders corrected their mistake by paying dues, but still faced a penalty. \r

The court noted the lack of clarity in the penalty's justification despite the petitioner settling SGST and CGST dues and paying Rs. 4,78,573. The court set aside the impugned order, requiring Jayasri Traders to remit 10% of the cess demand within two weeks and submit a detailed reply. \r

The first respondent must provide a fair hearing and issue a revised order within three months.