Jogiram (P) Ltd. claimed ITC of ₹ 2,50,000 with an intention to defraud the Revenue. What is the rate of interest at which the liability could be discharged voluntarily ? Can the Revenue levy penalty, if so, how much? Ca

Utilisation of ITC Section 74 of the CGST Act, 2017 says that when a registered person has not paid tax or short paid or received erroneously refund or claimed input tax credit by reason of fraud or any willful mis-statement or suppression of facts, he shall be liable to pay such tax along with interest payable under section 50 of the Act. Presently, the rate of interest notified under Section 50 is 18%. Where the registered person pays such tax along with interest voluntarily before the service of notice under Section 74, it shall be liable to pay penalty at the rate of 15% of such tax in terms of Section 74(5) of the Act. Section 49(4) of the CGST Act provides that the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed. Section 2(82) of the CGST Act defines the term "output tax" in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis; Thus, the amount available in the electronic credit ledger i.e. input tax credit can be used only towards payment of output tax and the definition of output tax includes only tax chargeable on taxable supplies and excludes tax chargeable under reverse charge. In light of above, input tax credit can be used only for the payment of tax and cannot be used for payment of interest, penalty and tax under reverse charge.