One of our client had not reversed ITC beyond 180 days as per Rule 37 of CGST Rules 2017. However, he made complete payment to seller on 210th day.
1)Whether Interest/penalty will be levied in above case ?
2) If yes, whether for 30 days (210-180) OR For entire 210 days ?
No penalty is normally levied if Taxpayer pays interest on his own.
18% Interest will have to be paid for entire 210 days (Assuming ITC availed immediately in GSTR 3B return of respective month)
The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability.
( ITC is said to be availed when you File GSTR 3B return and it is posted
into Electronic Credit Ledger : Circular No 79/50/2018 GST Dated 31st
December 2018 )
When GST ITC is said to be availed ?
Para No 11 of Circular No 79/50/2018 GST Dated 31st December 2018
Input tax credit can be said to have been “availed‟ when it is entered into the electronic credit ledger of the registered person.
Under the current dispensation, this happens when the said taxable person files his/her monthly return in FORM GSTR-3B.
Refer Rule 37 of CGST Rules
Reversal of input tax credit in the case of non-payment of consideration
37. (1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice:
Providedthat the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16:
2 [Provided further that the value of supplies on account of any amount added in accordance with the provisions of clause (b) of sub-section (2) of section 15 shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16.]
(2) The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered person for the month in which the details are furnished.
(3) The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid.