Kabir & Sons reduced the amount pertaining to an ineligible ITC credit of ₹ 2,56,000 from the output tax liability in contravention of the provision of section 42(10) of CGST Act, 2017 in the month of December, 2023
CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · PYQS · June 2024
Kabir & Sons reduced the amount pertaining to an ineligible ITC credit of ₹ 2,56,000 from the output tax liability in contravention of the provision of section 42(10) of CGST Act, 2017 in the month of December, 2023 and filed GSTR3B on the due date 20th January, 2024. In response to the above, a show cause notice was issued by GST Department under section 74 of CGST Act along with interest. The firm paid the tax and interest on 08.02.2024. Calculate the interest liability payable, if any in the context the CGST Act, 2017.
Answer & Explanation:
As per section 42(10) read with section 50(3) of the CGST Act, 2017 amount reduced from the output tax liability in contravention of the provision of section 42(7) shall be added to the output tax liability of the recipient in his return for the month in which such contravention takes place and such recipient shall be liable to pay interest on the amount so added at the rate specified in section 50(3) of CGST Act 2017. Therefore, applicable rate of interest is @ 18% per annum. Due date for December month return is 20 th January 2024. Delay period: From 21 st January, 2024 to 8th February, 2024 = 19 days Interest = ₹ 2,56,000 * 18% * 19/365 Days = ₹ 2,399 Note: Section 42 of the CGST Act, 2017 has been Omitted (w.e.f. 01.10.2022 vide Notification No. 18/2022-C.T., dated 28.09.2022) by s.107 of the Finance Act, 2022 (No. 6 of 2022).
Topics: Goods and Services Tax (GST)
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