GST – Started By: – Ravikumar Doddi – Dated:- 16-1-2019 Last Replied Date:- 17-1-2019 – Dear sir,Is interest is applicable on the unutilized credit of TRAN1 which was disallowed by department or in a regular returns some times we may claim ITC erroneously – Reply By KASTURI SETHI – The Reply = Answer is NO. As per Section 50(3) CGST Act, 2017 output liability will be reduced only after utilisation of ITC, hence in my view no interest is chargeable on unutilized credit whether in TRANS 1 or otherwise. – Reply By Spudarjunan S – The Reply = Dear Sir, Even the GST Council has also proposed in its 31st council meeting held on 22nd December 2018, that interest for late filing of GSTR 3B would be applicable only on the Net payable amount in Cash, and not on the entire Gross tax liability payable for a month. However said proposal is not notified as of yet. The same contention may be taken for the unutilised tran credit. – Reply By KASTURI SETHI – The Reply = Clear picture will emerge after
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o GST becomes the transfer of irregular credit and requires to be paid back to the Government. The same may be paid back by way of reversal of CGST credit through Table 4(B)(2) of the GSTR – 3B and intimate the department in writing with a dated acknowledgement. In case there is no sufficient credit this gets reflected into to electronic output register and needs to be paid in cash. 2. Interest liability: The consequential interest liability would vary in different scenarios which are discussed below: a. When CESS credit carry forwarded into GST but not utilized: As far as interest on input tax credit, the reference shall be made to the section 50(3) of CGST Act, 2017 which specifies that interest is required to be paid by a taxable person at 24% if he claims any undue or excess claim of input tax credit under Section 42(10) and Section 43(10). As these sub-section deals with the concept of matching, reversal and reclaim of input tax credit which are not in force as on date therefore t
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l date of reversal. ✓ Is there any waiver of the interest liability as the ineligibility was due to retrospective amendment? It Is very important to note that the Cess credit was eligible upto the enactment however it is becoming ineligible from the past date on the date of enactment, so non-payment of the output liability (to the extent of utilization) will be on the date of enactment, which has to be made good by making the payment and hence the question of interest arises. In general, whenever retrospective amendment was made, it was the practice of the Government to give a saving clause in terms of either waiver of the interest liability or specify the cutoff date from which the interest liability would attract. Unfortunately, no such saving clause is found in the present retrospective amendment made in the section 140, ibid. Judicially, the Hon ble Supreme Court in case of Star India Pvt Ltd Vs CCE, Mumbai 2006 (1) STR 73 (SC) = 2005 (3) TMI 10 – SUPREME COURT held that int
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