Section 140 of the CGST Act, 2017 —Transitional Credit -– The Petitioner challenged an appellate order dated July 14, 2021 passed in connection with a SCN dated July 31, 2019. The respondent submitted that the impugned appellate order dealt with the entire claim of Rs.6,86,73,062/- in two parts: the first pertained to the cenvat credit of Rs.6,55,99,154/- and the second pertained to a credit of Rs.30,73,908/- that had been availed through TRAN-1, which was completely impermissible. The petitioner submitted that since the larger part of the claim has been allowed following the dictum in Amrit Cement Limited, the 100 per cent penalty imposed by the Department should also go. The court observed that since the larger part of the claim in excess of Rs.6 crore has been upheld in favour of the assessee, the imposition of penalty for the corresponding amount will no longer apply. The court further observed that the penalty on the balance amount would not be covered under Section 74 of the Act since there was no attempt to defraud the revenue or mislead it or any suppression of material facts.

Held that:- The Hon’ble High Court set aside the appellate order to the extent that it disallowed the petitioning assessee’s claim of Rs.6,55,99,154/- and by upholding the appellate order to the extent that it rejected the balance claim of Rs.30,73,908/-. Further, the penalty imposed by the appellate order is set aside in its entirety.