ITC wrongly availed

[Ankit TMI]

What are the interest and penal liability in case a supplier has wrongly availed CGST / SGST credit against IGST. However, the same has been reversed before utilisation. Kindly quote specific section that affects the said scenario.

Thanks

[YAGAY and SUN]

If interest @24% is paid along with reversal of ITC which was wrongly availed before issuance of SCN then there would be no penal actions initiated by the Department.

[Ankit TMI]

Thanks you sir for your response. Can you please help me out with exact provision which levy interest in such a scenario. Is your reply is in context of mismatch under Section 42 and Interest under section 50.

[YAGAY and SUN]

Our reply is in context with Section 50 of the CGST Act.

[Mahadev R]

Interest can be paid at 18% instead of 24%. Section 50(3) which states about excess or wrong claim of credit is applicable when 42(10 or Section 43(10) triggers. Presently there is no matching concept. So pay 18%. If there is subsequent demand, then we could pay differential 6% or litigate. there is no interest for delayed payment of interest

[YAGAY and SUN]

We endorse the view of Mr. Mahavir. 

[Ankit TMI]

Thanks for your time and valuable opinion. I analysed the provision thoroughly. However, i am unable to find an iinterpretation werein itc wronlgy availed but not utilised is subjected to levy of interest. It merely covers three scenario: first, tax payable has been paid belatedly, second, mismatch u/s 42, third, mismatch u/s 43. Thus i dont feel that interets in the present scenario could be levied

[YAGAY and SUN]

If you avail & reverse ITC then you would have to mention it in return and hence, Interest would be payable, accordingly.

[KASTURI SETHI]

Peruse Section 42(10), Section 43 (10), Section 50(3) along with Notification No.13/17-CT, dated 28.6.17 and 9/17 -CT dated 28.6.17 effective from 1.7.17.

AI Summary

Interest on wrongly availed input tax credit may arise depending on reversal timing and reporting in returns.
The key operative position is that interest under the GST interest provision governs wrongly availed input tax credit claims; whether interest is chargeable depends on whether the wrong claim is merely reversed and reported in returns before departmental action or is detected through statutory matching and verification processes that trigger corrective adjustments and potentially higher interest or differential interest requirements.