Interest on wrong input tax credit reversal was held not payable where the credit was never utilised.

Interest under Section 50(3) of the West Bengal GST Act was held not leviable where input tax credit was wrongly availed but subsequently reversed without utilisation. The position was treated as settled by Circular No. 192/04/2023-GST and other High Court decisions, and the retrospective amendment by the Finance Act, 2022 was accepted as confirming that no interest is payable in such cases. The impugned orders were set aside, with fresh adjudication directed.

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Issues: Whether interest could be levied under Section 50(3) of the West Bengal Goods and Services Tax Act, 2017 on wrong availment of Input Tax Credit where the credit was reversed and not utilized.

Analysis: The issue was treated as settled in view of Circular No. 192/04/2023-GST dated 17.7.2023 and the decisions of other High Courts. The respondents also accepted that Section 50(3) had been amended by the Finance Act, 2022 with retrospective effect from 1 July 2017 so that interest was not payable where Input Tax Credit was availed and reversed without being utilized.

Conclusion: Interest was not leviable in the stated circumstances, and the impugned orders were set aside with a direction for fresh adjudication by the authority.

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