interest on reversal of ITC wrongly claimed

[tejas kulkarni]

I have wrongly claimed ITC of IGST on inputs of rs 5,00,000 in the month of april and i reversed it immediately in the month of june. However till june amount of ITC is remained as unutilised credit in credit ledger. i have not used the ITC against liability to that extent

. Whether i need to pay interest from the date of availment of itc till the date of itc reversal even if i have not utilised the same.?

AI Summary

Interest on undue input tax credit may apply under law, but may be avoidable if reversed before utilisation.
Competing views govern interest on wrongly claimed ITC: one view treats statutory interest as payable on undue or excess ITC claims identified under the matching framework to prevent abuse; the contrary view-supported by judicial commentary and practical concerns about the inactive matching functionality-holds that interest is payable only when the wrongfully claimed ITC has been utilised to reduce output tax liability, and that reversal before utilisation and before any matching determination should preclude interest.