Rule 86B Annual payment of 1% differential liab

[ARVIND JAIN]

As per Rule 86B of GST , dealer has to pay 1% of input via the cash ledger only on a monthly basis. but dealer has paid it on lumpsum basis at year end , Is this allowable or does differential tax have to be paid via DRC 03 for shortfall in monthly  payments? This point was  raised in gst Audit visit ,  in Actual for respective FY 21-22 no tax was payable and the dealer has paid it all together in March 22 (as per monthly total difference ) instead of monthly. No change in total figure. Any remedy now?  Can we claim it as a refund for  tax paid by filing RFD form.

[Ganeshan Kalyani]

If no tax was payable then the tax paid is merely a payment. You can seek refund u/s 54.

[ARVIND JAIN]

Tax was  payable but as  per rule it should  be monthly and we paid at year end in March

AI Summary

Payment of 1% differential liability under Rule 86B: annual lump-sum payment questioned; refund under section 54 suggested. Rule 86B imposes a monthly requirement to deposit a one percent differential liability into the cash ledger from input tax credits; the question is whether an annual lump-sum deposit satisfies this requirement or whether shortfalls must be regularised through DRC-03. The contributor reports no net tax liability for FY 2021-22 and a year-end payment matching aggregate monthly differentials. The advice given is that a payment when no tax was due constitutes an inadmissible payment and may be reclaimed by pursuing a refund under the refund provision, permitting restoration of cash where applicable.