A Registered Person (RP) has availed ITC based on the invoices issued by his Suppliers. However, after investigation by the Department, it was found that the said ITC was wrongly claimed without supply of goods. The RP has agreed to pay the availed and utilized ITC in cash and paid the same by debiting the Electronic Cash Ledger.
The query now is, how to deal with ITC availed but not utilized. Whether the same can be reversed by debiting Electronic Credit Ledger or should the same be paid in cash by debiting Electronic Cash Ledger. Any CBIC Circular in this matter. Thanks.
Debate on reversing wrongly availed Input Tax Credit under GST: Pay in cash with interest per Section 50 CGST Act. A discussion on the reversal of wrongly availed Input Tax Credit (ITC) under the Goods and Services Tax (GST) framework, initiated by a registered person who claimed ITC without actual supply of goods. The consensus among contributors is that such ITC should be reversed by paying in cash, with interest, as per section 50 of the CGST Act. Some argue that ITC can be reversed using the Electronic Credit Ledger, while others emphasize the need for cash payment to clearly differentiate between lawful and unlawful ITC claims. The debate also touches on legal provisions and amendments affecting ITC reversal, highlighting differing interpretations among professionals. (AI Summary)
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