The Electronic Credit Ledgers of Nath Motors Ltd showed the following monthly closing balances for 3 months: Months CGST SGST IGST Total ITC balance in all 3 ECL January, 2024 500 500 4000 5000 February, 2024 1000 1000 2

Answer 2(c) Sub-rule 3 of Rule 88B. Manner of calculating interest on delayed payment of tax In case, where interest is payable on the amount of input tax credit wrongly availed and utilised in accordance with sub-section (3) of section 50, the interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such credit or payment of tax in respect of such amount, at such rate as may be notified under said sub-section (3) of section 50. Further refer to the recent Circular No. 192/04/2023 GST dated 17.07.2023 issued for clarification on charging of interest under section 50(3) in cases of wrong availment of IGST credit and reversal thereof which clarified as under: As per Rule 88B of CGST Rules, the amount of ITC available in Electronic Credit Ledger 'ECL', under any of the heads of IGST, CGST or SGST, can be utilized for payment of liability of IGST, it is the total Input Tax Credit 'ITC' available in ECL, under the heads of IGST, CGST and SGST taken together, that has to be considered for calculation of interest under rule 88B and for determining as to whether the balance in the ECL has fallen below the amount of wrongly availed ITC of IGST, and to what extent the balance in ECL has fallen below the said amount of wrongly availed credit. Thus, in the cases where IGST credit has been wrongly availed and subsequently reversed on a certain date, there will not be any interest liability under section 50(3) if, during the time period starting from such availment and up to such reversal, the balance of Input Tax Credit in the ECL, under the heads of IGST, CGST and SGST taken together, has never fallen below the amount of such wrongly availed ITC, even if available balance of IGST credit in ECL individually falls below the amount of such wrongly availed IGST credit. However, when the balance of ITC, under the heads of IGST, CGST and SGST of ECL taken together, falls below such wrongly availed amount of IGST credit, then it will amount to the utilization of such wrongly availed IGST credit and the extent of utilization will be the extent to which the total balance in ECL under heads of IGST, CGST and SGST taken together falls below such amount of wrongly availed IGST credit, and will attract interest as per section 50(3) read with section 20 of the IGST Act, 2017 and of rule 88B(3). Conclusion: With reference the provisions and clarification issued as above, Since the balances available of ITC (taken together in all three ECL: CGST, SGCT and IGST) during months of January, February and March were 5,000, 4,000 and 4,000 which did not fall below the amount of wrong IGST ITC availed and utilized of ₹3,000. The company would not be liable to pay any interest for the period of wrong availment & utilization and later reversal of the same.