Wrongly claimed and used input tax credit attracts interest when ledger balances show consumption before reversal, regardless of intent.

Wrongly claimed and used input tax credit attracts interest when ledger balances show consumption before reversal, regardless of intent.Case-LawsGSTInterest under Section 50(3) of the UPGST Act, 2017 applies where input tax credit is both wrongly avail…

Wrongly claimed and used input tax credit attracts interest when ledger balances show consumption before reversal, regardless of intent.
Case-Laws
GST
Interest under Section 50(3) of the UPGST Act, 2017 applies where input tax credit is both wrongly availed and utilised. The interest compensates for revenue loss caused by delayed tax payment or incorrect or excess use of credit; an intention to evade tax is irrelevant. Repeated nil balances in the Electronic Credit Ledger before reversal established that excess credit had been used to discharge tax liabilities, making the claim that sufficient unutilised credit remained available untenable. Interest on the utilised excess credit was therefore sustainable.
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