under declaration of tax

[giri gattupalli]

respected sir,

one of my dealer received letter/ intimation from department asking to pay under declared gst amounting to rs 1,20,600 and interest @18% for fy 2020-21. and after verification of books of accounts we found that , tax demand is genuine and we decided to pay.

1. i have excess of input tax credit laying in my electronic credit ledger now. can i pay the tax due for fy 2020-21 by utilizing present input tax credit ?. i heard different opinions.

2. whether i need to pay interest or not ( in the light of interest waiver announcement made by financial minister .)

please discuss. thanking you

[Shilpi Jain]

The interest waiver in the press release is only for FY upto 19-20. FY 20-21 is not covered,

However, in my view, no interest should be applicable if you had the credit balance with you on the due date of payment of the tax liabilty demanded. This is considering that ITC is as good as cash paid as also held by many COurts.

[KASTURI SETHI]

What was the position  of ITC in  Electonic Credit Ledger on the due date of every month in 20-21 ? That has to be  taken care of.  

[Padmanathan KV]

Q-1 yes, you can pay the tax liability using the ITC .

Q-2 Specific facts as regards availablity of cash/credit from due date to date of payment  have to be checked. Its not free from litigation.

[KASTURI SETHI]

Regarding interest liability, read carefully the judgements dated 20.11.23 and 23.01.24 in the cases of Ask Loans - 2024 (1) TMI 375 - MADRAS HIGH COURT in and Eicher Motors Ltd.- 2024 (1) TMI 1111 - MADRAS HIGH COURT

[KASTURI SETHI]

Interest liability is not dependent on availability of credit in Electronic Credit Ledger, as tax payment occurs only upon filing of returns. Interest liability applies even if there was credit available in Electronic Credit Ledger-----Patna High Court reported as 2024 (5) TMI 264 - PATNA HIGH COURT

AI Summary

Input tax credit use: ITC can satisfy past GST liability if available on the relevant due date and recorded.
Discharging an assessed GST demand by utilising Input Tax Credit depends on the Electronic Credit Ledger balance on the relevant due date and supporting records; availability in the ledger is treated by many as equivalent to payment but entitlement requires proof of balance on each due date. Interest relief is limited by the announced waiver scope and contested judicially: some authorities link interest exemption to ITC availability on the due date, while others treat payment as effective only on return filing and thus impose interest regardless of ledger credit.