Wrong Input Claimed Reversed Through DRC03

[SUDESHKUMAR AGARWAL]

Respected Sir/Madam

One of my client wrongly availed input of Cess in FY 2021-22. The mistake came in to knowledge while filing Annual Return. In the business of my client Cess is not chargeable as output tax hence not utilised ever and this wrong credit availed was paid through DRC-03 after filing Annual Return.

I want to know that can department demand any interest / penalty on this un-utilised input. The client is based in Delhi. Please also give case laws of Hon'ble High Courts and/or Hon'ble Supreme Court, if any.

Regards

CA Sudesh Kumar Agarwal

AI Summary

Tax Pro Voluntarily Reverses Input Credit for Compensation Cess, Avoids Penalties Under GST Rule 87 A tax professional sought guidance on wrongly claimed input tax credit for Compensation Cess in FY 2021-22, which was voluntarily reversed through DRC-03. Legal analysis suggests no interest or penalty can be levied since the credit was not utilized and was proactively corrected. Judicial precedents from High Court and Supreme Court support that mere availing of credit without utilization does not attract punitive measures under GST regulations.