interest lability on ITC when payment to supplier is made after 180 days

[Rajat Gupta]

Hello, one of my client's purchased goods and availed ITC in October 2018. But he made the entire payment to the supplier only in FY 20-21. My query is in which financial year can the revenue officer raise SCN for interest in this case? Should it be FY 19-20 where the period of 180 days is over or till the period payment is made in full settlement?

AI Summary

Discussion on Issuing Show Cause Notices for Interest on Delayed Payments and Input Tax Credit under GST A client purchased goods and claimed Input Tax Credit (ITC) in October 2018 but paid the supplier in full only during FY 2020-21. The query concerns the financial year in which a Show Cause Notice (SCN) for interest can be issued. Amit Agrawal suggests that the relevant period for issuing an SCN is FY 2019-2020, as the 180-day period lapsed then. Kasturi Sethi adds that interest liability arises from the invoice date to full payment, and recurring SCNs can be issued until payment is complete. Shilpi Jain concurs that SCNs can be issued in the year the 180 days expire.