GSTR 9 AND 9C - BLOCKED CREDIT OR WRONG CREDIT ADJUSTMENT

[SAFETAB LIFESCIENCE]

Dear Experts,

If any blocked credit/wrongly availed credit found out while filing GSTR - 9 & 9C to be reversed. Shall we reverse the blocked credit/wrongly availed amount in Electronic Credit Ledger through DRC-03 and interest for the wrong credited amount by Cash ????

[KASTURI SETHI]

Payment of tax through Electronic Credit Ledger via DRC-03 is allowed and interest in cash through Electronic Cash Ledger.

[Mahadev R]

According to the instructions of GSTR-9 and GSTR-9C, payment to be made though cash only. ITC can be utilsed for payment of self assessed tax in return as per Section 41(2)

[KASTURI SETHI]

I agree with Sh.Mahadev R Ji. Notification No.74/2018 dated 31.12.18 (Serial No.) says that payment is to be made in cash through DRC 03. which is as follows:

"9. Towards the end of the return, taxpayers shall be given an option to pay any additional liability declared in this form, through FORM DRC-03. Taxpayers shall select “Annual Return” in the drop down provided in FORM DRC-03. It may be noted that such liability can be paid through electronic cash ledger only.”

As per Section 41 (2) of CGST Act ITC is to be utilized only for payment of self-assessed output tax as per return.

Self-assessed means/implies without (or before) issuance of SCN under Section 73 0r 74. So if an assessee detects short-payment before filing GSTR 9 and 9C and makes the payment of such tax through ITC via DRC-03 that will fall under self-assessed output tax and it will conform to Section 41 (2) of CGST Act.

Thus Central Goods and Services Tax (Fourteenth Amendment) Rules, 2018 inserted vide Notification No.74/2018 dated 31.12.18 are not in consonance with Section 41(2) of CGST Act. Hence Section 41 (2) of CGST Act will prevail over CGST (Fourteen Amendment) Rules, 2018. In this scenario, payment of tax through ITC via DRC-03 is legally valid.

AI Summary

Reversing Blocked Credits in GSTR-9: Pay Tax via Credit Ledger, Interest in Cash per Section 41(2), Notification 74/2018. A forum user inquired about reversing blocked or wrongly availed credits while filing GSTR-9 and GSTR-9C, specifically whether such reversals can be made through the Electronic Credit Ledger via DRC-03 and if interest should be paid in cash. One expert confirmed that tax payment through the Electronic Credit Ledger is permissible, but interest must be paid in cash. Another expert emphasized that payments must be made in cash according to GSTR-9 and GSTR-9C instructions, referencing Notification No.74/2018. The discussion concluded that self-assessed tax payments via ITC through DRC-03 are valid under Section 41(2) of the CGST Act.