Considering GST Rule 37, Is interest payable even if ITC availed earlier is not utilized?

[SHIVAM GUPTA]

Considering GST Rule 37 read with Rule 88B(3), Section 16(2)(c) & Section 50(3), Is interest payable even if ITC availed earlier is not utilized?

[Amit Agrawal]

In my view, liability to pay interest u/s 50 (3) read with rule 88B (3) has nothing to do with liability to pay interest under second proviso to Section 16 (2) read with Rule 37.

P.S. I have not understood relevance of Section 16(2)(c) in context of rule 37 quoted in the query.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

But, I also hold a view that no interest is payable u/s 50 if reversal / payment of ITC is done u/r 37 within / the end of the time limit specified in the second proviso to sub-section(2) of section 16.

And this position remains, in my humble view, even if such ITC was utilised in-between period (i.e. between date of availment of such ITC & its reversal within / at the end of the period of 180 days specified in said proviso).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Presently interest will not be payable if the credit is taken for payments beyond 180 days and the credit has not been utilised.

Earlier provisions (before amendment of rule 37) required payment of interest irrespective of whether utilised or not.

[SHIVAM GUPTA]

@shilpi, Thanks

AI Summary

Interest on input tax credit: reversal within prescribed time prevents interest even if credit was temporarily utilised.
Whether interest is payable when ITC is availed but later reversed depends on interaction between the tax-payment interest provision and the procedural reversal rule. One practitioner view holds that if ITC is reversed or paid back under the procedural reversal rule within the prescribed time limit, no interest under the tax-payment interest provision is attracted even if the credit was utilised temporarily. An additional note states that following the rule amendment, unutilised credit taken for specified delayed payments and reversed will not attract interest, unlike under earlier provisions.