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

Interest on delayed tax payment contested after mistaken ITC claim; higher interest rate challenged, lower statutory rate argued.
Taxpayer misclassified a genuine cash tax payment as ITC, later filed DRC-03 to appropriate the unapplied cash ledger and paid interest at the ordinary delayed-payment rate; the revenue issued a show-cause notice seeking a higher penal interest rate for the 21-month delay. Forum replies emphasize that no revenue loss was caused, the higher rate is contestable, ordinary delayed-payment interest is appropriate, and paying under protest with a view to seek refund or court relief is a recommended tactical response.