Goods and Services Tax

INTEREST ON ITC AVAILED BUT NOT UTILIZED UNDER GST

Goods and Services Tax – GST – By: – AttnVivek Jalan – Dated:- 11-1-2019 Last Replied Date:- 12-1-2019 – Across the country objections have raised by the GST Department on erroneously availed but not utilized ITC. In this article we will discuss on such objections and the legal provisions in this regard. First as per Sec 50(3) read with sec 42(10) of CGST Act, payment of interest is only triggered where there is a reduction in output tax liability. Hence in instances where there is no reduction in output tax liability but only erroneous availment of excess input credit, which has not been utilized by the assessee, interest liability is not triggered. Secondly there is no financial benefit of availment of excess ITC to the assesse and there

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s under – Amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger . Hence in our view, in the cases where the excess input credit was erroneously availed but not utilized and was reversed through unutilized credit balance available in the electronic credit ledger in the GST Portal , there was no amount payable through the electronic cash ledger. Therefore there is no question of interest at all. The above submission is also supported by the following judgements – The Punjab & Haryana High Court had addressed the i

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ication and would be in violation of Articles 14, 19 & 301 of The Constitution of India. – Reply By Himansu Sekhar – The Reply = Sir, The provision of interest in my view depends upon the language of the statutory provisions. In Ind Swift case Hon'ble Apex Court analysed the situation as per the provisions of Rule 14 of CCR 2014 and held that interest is payable when the credit has been availed. Later on Rule 14 was amended and interest was charged after the credit was utilised. With regards Himansu Sekhar Sha – Reply By L D Raj & Co – The Reply = Many cases were decided in Excise in favour of assessee, and later CCR were also amended that interest were leviable only on the ITC utilised erroneously and not on the ones, availed but n

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