TAX DEMAND ADJUST BY CURRENT ITC

[MUKESH SAXENA]

Gst deptt. imposed tax & intt. demand for the FY. 2018-19 to deposit.

my query is - can we adjust the demand of 18-19 by balance ITC stand in FY 2023-24.

[Amit Agrawal]

Please refer to Serial No. 6 & 7 under the Table in Circular No. 172/04/2022-GST dated 06.07.2022, wherein it is clarified as follows:

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4. Accordingly, it is clarified that any payment towards output tax, whether self-assessed in the return or payable as a consequence of any proceeding instituted under the provisions of GST Laws, can be made by utilization of the amount available in the electronic credit ledger of a registered person.

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"As per sub-section (4) of section 49, the electronic credit ledger can be used for making payment of output tax only under the CGST Act or the IGST Act. It cannot be used for making payment of any interest, penalty, fees or any other amount payable under the said acts. Similarly, electronic credit ledger cannot be used for payment of erroneous refund sanctioned to the taxpayer, where such refund was sanctioned in cash."

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

[KASTURI SETHI]

I am also of the same view as opined by Sh.Amit Agrawal Ji.

[Shilpi Jain]

Output tax can be adjusted, interst to be paid in cash.

Once credit availed it becomes a common pool and there is no restriction to use such credit for paying past liabilities more so when you are paying interest for late payment. Though you could face some dispute from department

[KASTURI SETHI]

Dear Mukesh Saxena Ji,

There is no one-to-one correlation in GST regarding utilization of ITC. There is not any time limitation for using ITC. Time limitation is for only availing ITC. There is not even remote possibility of any 'danger' for using ITC for payment of tax for the past liability. Tax paid character cannot be challenged, if paid out ITC account in this scenario. Govt. is concerned with payment tax and you are complying with the Adjudication Order. Interest and penalty are always paid in cash.

[Vijay kumar]

Section 49(4) r/w Sn.2(82) r/w Rule 86(2) clearly imply that "amount available in the electronic credit ledger can be utilized for payment of output tax, which is the liability of the taxable person".. In the earlier regime, there was a doubt because of a provision stating for discharging a month's liability, balance available at the end of that month only can be used and hence later liabilities cannot be adjusted or vice versa. However, no such issue in GST. You can adjust 18-19 demand against ITC balance of 2023-24, to the extent of tax

[Padmanathan KV]

I concur with the views of the experts, ITC can be used to adjust the tax demand. Interest and penalty, ofcourse, has to be paid in cash.

AI Summary

Input tax credit usage can discharge past tax demands while interest and penalties must be paid in cash.
The electronic credit ledger may be used to pay output tax-whether self-assessed or payable following proceedings-but not interest, penalty, fees or erroneous refunds. There is no time limit on utilizing availed ITC; the restriction applies only to availing ITC. Therefore, current ITC balance may be applied to discharge past tax demands to the extent of the tax, while interest and penalties must be paid in cash, though departmental disputes may arise.