WRONG AVAILMENT OF ITC

[ROHIT GOEL]

One of our client is engaged in export of services and is 100% EOU. Suppose unit has ₹ 100 as ITC and ₹ 18 as RCM Input however unit has wrongly availed input tax credit of ₹ 118 and RCM of ₹ 18 in GSTR-3B resulting into excess input of ₹ 18.

That the unit had applied for refund for such higher amount wherein AO has deducted ₹ 18 which was wrongly availed by unit in GSTR-3B as such effect of wrong availment got rectified. Later on AO has re-credited the amount of ₹ 18 to electronic credit ledger of unit and now during audit we are filing DRC-03 for ₹ 18 which was wrongly availed.

Now question is whether we have to pay interest on such amount as the amount of ₹ 18 was never utilised by unit and balance in electronic credit ledger was always more than ₹ 18.

AI Summary

Export Unit Faces Interest on Unutilized Excess Input Tax Credit; DRC-03 Filing Raises Questions on Interest Liability A client engaged in exporting services, operating as a 100% Export Oriented Unit (EOU), mistakenly availed an excess Input Tax Credit (ITC) of 18 in their GSTR-3B filing. Although the assessing officer deducted this excess during a refund application, the amount was later re-credited to the electronic credit ledger. During an audit, the client is filing DRC-03 for the wrongly availed amount and queries whether interest is payable, given the amount was never utilized and the ledger balance always exceeded 18. The response suggests interest might be applicable from the credit date until payment.