Wrongly availed and utilised GST

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This discussion addresses the correct procedure when Goods and Services Tax (GST) Input Tax Credit (ITC) has been wrongly availed and utilised. It clarifies whether a simple reversal of ITC with interest is sufficient, or if a cash payment via DRC-03 is required for past outward supplies. The advice suggests that while voluntary payment without notice avoids penalties, future eligible ITC cannot be used to settle past liabilities arising from incorrect availment in prior periods.

Manoj

Manoj (Querist)
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29 September 2022 Suppose GST availed is Rs. 200000/- for 2018-19. Utilised the whole ITC for outward supplies during 2018-19.

Later on found, ITC Rs. 200000/- availed was ineligible/wrong availment.

Whether:-
Reversal of ITC alongwith interest would suffice or whether Cash payment (from ECL) has to be made for outward supplies already made in 2018-19 utilising wrongly availed ITC.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 September 2022 Cash payment with interest has to be made through DRC 03 .

Manoj

Manoj (Querist)
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29 September 2022 Thanks sir.

Two doubts:
(1) As per section 50(3) of CGST Act, ineligible ITC if utilised, then interest is liable to be paid. In this case, ineligible ITC has been availed and utilised in 2018-19. Hence, whether mere payment of interest would be sufficient.

(2) If eligible ITC availed in future period, say for example 2019-2020, whether liability arised in 2018-19 (due to wrong availment and utilisation of ITC) can be reversed alongwith interest and the liability be settled.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 September 2022 1 yes, no penalty for voluntary payment without notice.
2 No.

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