#GST recovery stay

The Andhra Pradesh High Court has ruled that where ineligible Input Tax Credit was availed but not utilized, the tax authorities cannot impose interest under Section 50(3) or penalty under Section 74 of the CGST Act. This clarifies that mere availing of ineligible ITC, without actual benefit or misuse, does not trigger punitive liability - a critical safeguard for businesses facing retrospective tax demands.

Taxpayers facing GST recovery orders can now secure a stay on collection by filing a pre-deposit and undertaking under CBIC Circular 224/2024, even when the Appellate Tribunal remains unconstituted, provided compliance occurs within 15 days. This relief bridges a critical procedural gap for taxpayers awaiting appellate review, offering immediate financial protection without requiring tribunal formation.