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Interest on ITC Credit Claimed Twice against the RCM paid : Excess RCM claimed
Relevant provisions under GST Act. : Interest on ITC wrongly availed and utilised.
- As per substituted subsection 50 (3) of the act, interest is applicable only where ITC is wrongly availed and utilized. In order to attract interest u/s 50(3) of the act both components of wrong availment and utilization must be present. Where ITC is claimed wrongly in the return but lying in the electronic credit ledger as it as without utilisation, interest will be not payable.
- Interest should be calculated as per manner prescribed in rule 88B. Accordingly, an interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under said sub-section (3) of section 50.
Facts of the Case:Interest on ITC Credit Claimed Twice against the RCM paid
After thoroughly investigating the matter, GST taxpayer recognized the error and subsequently, rectified the same through the submission of DRC 03 and the balance amount reversed in GSTR3B of October 2023 and reconciled the input tax credit (ITC) against the RCM.
Further, year wise summary and reconciliation of GST Electronic Credit Ledger and Cash Ledger made to GTO that clearly evidencing the instances of short payment of Goods and Service Tax Liability along with overdue period, which is very negligible in value as well as overdue period, moreover calculating interest on that value for that overdue period is very difficult, further informing by GST taxpayer above said summary & reconciliation of Electronic Credit and Cash Ledger clearly showing the average closing balance of GST input is quite high as compared to default amount and period. year wise summary and reconciliation of GST Electronic Credit Ledger and Cash Ledger is enclosed hereunder for GST office kind perusal;
all the GST taxpyer should consider Importance of compliance with GST regulations, & steps have to be taken to prevent such errors in the future. Taxpayer apologize for any inconvenience caused and appreciate the department's support in resolving this matter promptly. Taxpayer should humbly request GTO to waive the interest on outstanding balance for the overdue period, if any,
Furthermore, Few judgement pronounced by the Hon’ble court, which are clearly mentioning that the interest is not leviable on ITC which is availed however not utilized for payment of tax. e.g.
- The Hon’ble Patna High Court it was held, in the case of M/S Commercial Steel Engineering Corporation Vs State of Bihar, that interest is not leviable on ITC which is availed however not utilized for payment of tax
- The Punjab & Haryana High Court had addressed the issue in its decision in Ind-Swift Laboratories Ltd. Vs Union of India [2009-240-ELT-328 (P&H)], wherein it was held that no interest was payable if the CENVAT Credit is merely availed and not utilised for payment of tax
- Punjab and Haryana High Court, again in CCE vs. Maruti Udyog Ltd. [2007 (214) ELT 173 (P&H)], held that an assessee was not liable to pay interest where credits had only been availed erroneously but were not subsequently utilised.
- Further, on the basis of above stated discussion, GST taxpayer should requesting to officer, for not levying the interest and penalty on account of wrongly claimed GST credit whereas GST availed but not utilized for payment of tax therefore requesting GST officer to consider the same while calculating the interest on delayed in payment of tax, if any.
Finnaly GST tax office will make there jusgement on excess RCM claimed: ITC Claimed Twice against the RCM paid
