respected sir,
demand order in Form DRC -07 was issued on my client amounting to Rs 10,00,000 for fy 2020-21. and tax liability shown in notice is genuine and my client ready to pay off the liability by debiting his electronic credit ledger. and the proper officer also agreed to do so.
there was credit laying in my client' s input tax credit ledger continuously right from fy 2020-21. and no cash component was used to pay tax liability. in this scenario whether there is liability to pay interest or not. please discuss
thanking you
Interest Mandatory for Tax Demand Under CGST Act Sections 73/74; Cannot Use Credit Ledger for Interest Payment A client received a demand order under Form DRC-07 for Rs 10,00,000 for the fiscal year 2020-21, acknowledging the tax liability and opting to pay via their electronic credit ledger. The primary concern is whether interest is applicable in this scenario. One response indicated that under Sections 73 or 74 of the CGST Act, interest is mandatory if these sections are invoked for recovery, regardless of the credit balance. Another response clarified that interest and penalties must be paid in cash and cannot be settled through the credit ledger. The discussion also touched on the nature of the demand, whether it was due to short payment or excess ITC availment. (AI Summary)
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