wrongly availed ITC

[SRIHARI CHILLA]

Dear Experts,

My client is the Registered supplier to ITC Ltd, paper mill bhadrachalam.

He is supplying the D-Barked eucalyptus wood to the paper mill.

the issue is in the first month of GST implementation i.e July 2017

We are purchasing the eucalyptus trees from the Farmers and cutting them in diff sizes and sending them to ITC. Farmers are unregistered Dealers.

While filing the GSTR-1 the showing the liability of IGST correctly and filed within the due date.

But While filing the GSTR-3B the assesee was paid the IGST within the due date of 20-08-2017

but he was confused about the RCM mechanism while filing the GSTR-3B by utilizing the ITC and filed the return. but the paid tax remained in the cash ledger.

This was noticed later and adjusted while filing the Annual returns GSTR-9 and 9C by reversing the wrongly availed the ITC and and adjusted to tax liability was set off with the available balance in the cash ledger which was paid earlier.

now The Department asking to pay interest on wrongly availed the ITC and late payment of tax. kindly suggest it to us please with case laws or any circulars etc..

AI Summary

Supplier Faces Interest Demand Over Early GST Input Tax Credit Error; Litigation Considered for Relief A client, a registered supplier to a paper mill, faced issues with wrongly availed Input Tax Credit (ITC) during the initial GST implementation in July 2017. The client purchased eucalyptus trees from unregistered farmers and paid Integrated GST (IGST) on time but was confused about the Reverse Charge Mechanism (RCM) while filing GSTR-3B. This resulted in a misallocation of funds, later corrected in the annual returns. The tax department is now demanding interest on the wrongly availed ITC and late tax payment. Experts suggest litigation as a possible relief, emphasizing the errors were unintentional during GST's early phase.