Operational Definition of Claimed vs Availed

[LAKSHMINARAYANAN TR]

Section 50 (3) the act says any undue or excess credit claimed will be taxed to an extent of 24%.

However I would like to understand whether Claimed alone is exposed to interest or simple availed and not utilized will also be exposed to Interest of 24%

[Rajagopalan Ranganathan]

Sir,

Section 50 (3) of CGST Act, 2017 stipulates that " a taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council."

The law is clear. It levies interest on mere claim of excess ITC whether it is utilized or not.

[YAGAY andSUN]

In our view there is a thing red line difference between Claimed & Availed. Claim includes utilization but avail does not.

[KASTURI SETHI]

Difference between "Claimed" and "Availed"

"Claimed" means you are to qualify the following parameters/conditions:-

(i) Invoice is within one year

(ii) Goods(inputs) have been received physically in the factory.

(iii) Inputs are not in the list of (ineligible inputs/input services under Section 17(5) of CGST Act & other Sections, if relevant.

(iv) Payment has been made against the invoice.

(v) If under RCM, cash payment has been made.

and so on.

After crossing the stage of 'claim' you will avail ITC in your books of accounts and other statutory records i.e. in various returns and declarations.

Thus the words, "availed" and "Claimed" both are prior to utilization.

If you claim ITC in your books of accounts or other statutory records, you are prone to interest and penalty both.

For example : You file TRANS-1 wrongly. Thus you are claiming ITC wrongly . In this question availing arises only after verification from the department. If you claim wrongly and avail on the basis of wrongly filled in TRANS-1. Both are separate offences. In both instances, utilization is not in picture.

AI Summary

Interest on undue input tax credit applies to mere claim of excess ITC even if not utilized. Section 50(3) imposes interest on undue or excess claims of input tax credit irrespective of utilization: interest is chargeable on the mere claim of excess ITC whether availed or used. 'Claimed' is operationally defined by conditions such as invoice timeliness, receipt of inputs, eligibility under section 17(5), and payment; once claimed and recorded (availed) in books and returns, the taxpayer is exposed to interest and penalty, with separate offences possible for wrongful claim and wrongful availment (eg, incorrect TRANS-1).