Balance in electronic cash ledger

[Umesh Babu]

Sir/Madam,

after calculating March month liability,a company paid the amount in cash on 31st March.

Inadvertently, the cash payment was shown as ITC and GSTR-3B was filed. After 21 months the mistake was realized and DRC-03 with interest @ 18%, was filed voluntarily appropriating the balance in cash ledger which was not appropriated for 21 months.

Now in SCN, the interest is demanded for the 21 months @ 24%.

The query is, since the cash payment was genuine and appropriation was delayed, and amount was not utilised throughout the period of 21 months, can we escape from interest liability ,

Kindly clarify,

Umesh Babu

AI Summary

Company Disputes 24% Interest Demand for ITC Error; Argues No Revenue Loss, Seeks 18% Interest Instead A company mistakenly recorded a cash payment as Input Tax Credit (ITC) in their GSTR-3B filing for March, realizing the error 21 months later. They filed DRC-03 with 18% interest to rectify this. However, a Show Cause Notice (SCN) demands 24% interest for the 21-month delay. Respondents in the forum suggest that since there was no revenue loss, the interest demand may not be justified, and the interest should be 18%. They advise considering court action for relief, suggesting that procedural lapses should not incur penalties, and to pay interest under protest if necessary.