TaxTMI 
TaxTMI 
Interest on ITC correctly availed but reversed as supplier failed to remit tax to the Govt.
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....nterest on ITC correctly availed but reversed as supplier failed to remit tax to the Govt.<br> Query (Issue) Started By: - Raam Srinivasan Swaminathan Kalpathi Dated:- 8-7-2026 Last Reply Date:- 19-7-2026 Goods and Services Tax - GST<br>Got 7 Replies<br>GST<br>ITC by a client was correctly availed. Supplier did not remit tax to the Govt. FY 2020-21. Said ITC was voluntarily reversed upon receipt o....
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....f audit paras from department. Is the tax payer required to also remit Interest u/s.50(3). Said Section 50 states "Where ITC has been wrongly availed and utilised .........". In our case ITC not wrongly availed. Request view of experts. Also, case law references would be gratefully acknowledged. Thanks Reply By Raam Srinivasan Swaminathan Kalpathi: The Reply: Also, OIO was passed under ....
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....Sec.73. Reply By KALLESHAMURTHY MURTHY K.N.: The Reply: Sir, ITC availed and utilised is irregular in terms of Sec. 16(2)(c), where the supplier has not remitted tax. So, interest is payable. The interest is not applicable if ITC is not utilised or continuously held at credit more than the amount of ITC reversed. Unless all the conditions are satisfied u/s 16 (2) and 16(20(c) it is treated....
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.... as wrong availment. Reply By VENU K: The Reply: Wrongly Availed and Utilised': When the ITC became ineligible due to the supplier's non-payment, its continued presence and subsequent utilization in the electronic credit ledger would constitute 'wrongly availed and utilised' credit for the purpose of Section 50(3). The retrospective application of Section 50(3) from July 1, 20....
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....17, covers the Financial Year 2020-21. The Madras High Court, in Assistant Commissioner (ST) vs. Jayashree Enterprises 2026 (6) TMI 1208 - MADRAS HIGH COURT and Assistant Commissioner (ST) vs. Jayashree Enterprises [2026] 187 taxmann.com 948 (Madras)[17-06-2026], explicitly stated that Section 50(3) specifically addressed wrongful availment and utilization of ITC and that any availment and util....
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....ization of ineligible ITC constituted wrongful availment and utilization. The Court dismissed the writ petition, upholding the levy of interest where ineligible ITC was utilized due to a mismatch between GSTR-3B and GSTR-2A. This case underscores that the ineligibility of ITC, even if not due to the recipient's direct fault, renders it 'wrongly availed' if it is subsequently utilized. ....
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.... Reply By KASTURI SETHI: The Reply: ITC was not correctly availed. Without deposit of tax into Govt' s kitty by the supplier, the buyer has no statutory right to avail ITC. Section 16 (2) is very much clear. Reply By KASTURI SETHI: The Reply: ITC was not correctly availed. Without deposit of tax into Govt' s kitty by the supplier, the buyer has no statutory right to avail ITC. Sec....
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....tion 16(2) is very much clear. Reply By Shilpi Jain: The Reply: Once you have accepted the tax liability, interest is automatic. Reply By Shilpi Jain: The Reply: Once you have accepted the tax liability, interest is automatic.<br> Discussion Forum - Knowledge Sharing ....