Interest on ITC untilised Balance in ECRL

[Pankaj Agarwal]

Facts:

1. A & Co P Ltd has maintained the credit balance as under:

SGST: Rs.150,75,000/- which was maintained since July 2019 to December 2022 (January 2023 onwards the SGST balance is at Rs.510,000/-)

2. There was a ITC disallowance (in SCN) of IGST Rs.1500,000/- for the month of November 2020.

3. The payment of IGST Rs.15lakh is made on 05/02/2023 through Form GST DRC-03

My Query:

Whether interest on disallowance of IGST ITC on Rs.15 lakh from November 2020 till 04/02/2023 will be applicable or not?

Regards

AI Summary

Interest on wrongly availed ITC arises from date of utilisation until reversal under Rule 88B guidance.
Interest under Section 50(3) read with Rule 88B is payable on wrongly availed and utilised ITC from the date of utilisation until reversal/payment; utilisation is deemed when the electronic credit ledger balance falls below the wrongly availed amount, and the extent and date of utilisation are determined by the ledger shortfall or return-related rules. The computation dispute concerns whether ITC balances across IGST, CGST and SGST heads are to be considered together or separately when determining utilisation; the GST Council recommended a circular treating the heads together for interest calculation.