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

Input tax credit misuse: interest applies only when wrongly availed credit is utilised, not when reversed.
Interest for wrongly availed Compensation Cess credit is contingent on utilisation of that credit; where such credit was availed but not utilised and later reversed with payment via corrective filing after the annual return, the applicable GST interest framework (applied mutatis mutandis to Compensation Cess) does not support interest or penalty tied to mere availment.