Demand on Audit

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223 Points Posted on 22 February 2023
We had surrendered our RC a year back and in that there was ITC available of more than 27k , the refund of which was not taken as per rule. Now we had received GST audit notice and in that some demand including interest of app 10k has been levied. Can we adjust the demand from ITC even after surrender of ITC and also inform whether the officer can levy interest etc if sufficient ITC is available.
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On 22 February 2023 at 09:42 Report
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Quick Summary
This discussion addresses a GST audit notice where a demand, including interest, has been levied despite a significant ITC balance available before RC surrender. The key question is whether this ITC can be used to offset the demand and interest. The consensus is that while output tax liabilities can be settled using ITC, interest and penalties must be paid from the cash ledger. Therefore, the available ITC cannot be used to cover the levied interest, even if it exceeds the demand amount.

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accountant
118 Points Posted on 22 February 2023
Interest need to be paid by cash and any short payment of tax you can adjust with available input credit
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On 22 February 2023 at 11:41
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223 Points Posted on 22 February 2023
Thanks but how department can calculate interest if sufficient ITC is available and demand can be adjusted fully from that
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On 22 February 2023 at 12:35
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CA | GST | Refunds | Advisory | Litigati
1463 Points Posted on 22 February 2023

1. Interest is always to be paid through E-Cash ledger, ITC balance cannot be used for payment of Interest

2. Interest can be levied for delayed reporting and payment of GST even when paid through ITC

3. You need to understand the nature of demand raised by the GST officers, only then you can decide applicability of Interest on delay payments

 

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On 22 February 2023 at 13:01
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223 Points Posted on 22 February 2023
Thanks. I believe even after surrendering RC we can adjust the demand with unutilised ITC except interest if any.
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On 22 February 2023 at 13:19
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GST Practitioner
55067 Points Posted on 29 April 2023
Yes correct .
As per Section 49 of CGST Act , Interest, penalties need to be adjusted by Cash Ledger & any output liability can be adjusted against Credit ledger.
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On 29 April 2023 at 23:30

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