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Circular No. 192/04/2023-GST
File No. CBIC-20001/5/2023-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
GST Policy Wing
*****
New Delhi, Dated the 17th July, 2023
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on charging of interest under section 50(3) of the CGST Act, 2017,
in cases of wrong availment of IGST credit and reversal thereof.
References have been received from trade requesting for clarification regarding charging of
interest under sub-section (3) of section 50 of the Central Goods and Services Tax Act, 2017
(hereinafter referred to as the “CGST Act”) in the cases where IGST credit has been wrongly availed
by a registered person. Clarification is being sought as to whether such wrongly availed IGST credit
would be considered to have been utilized for the purpose of charging of interest under sub-section (3)
of section 50 of CGST Act, read with rule 88B of Central Goods and Services Tax Rules, 2017
(hereinafter referred to as the “CGST Rules”), in cases where though the available balance of IGST
credit in the electronic credit ledger of the said registered person falls below the amount of such
wrongly availed IGST credit, the total balance of input tax credit in the electronic credit ledger of the
registered person under the heads of IGST, CGST and SGST taken together remains more than such
wrongly availed IGST credit, at all times, till the time of reversal of the said wrongly availed IGST
credit.
2.
Issue has been examined and to ensure uniformity in the implementation of the provisions of
law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of
the CGST Act, hereby clarifies the issues as under:
S. No.
Issue
Clarification
1.
In the cases of wrong availment of
IGST credit by a registered person and
reversal thereof, for the calculation of
Since the amount of input tax credit available
in electronic credit ledger, under any of the
heads of IGST, CGST or SGST, can be
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interest under rule 88B of CGST
Rules, whether the balance of input tax
credit available in electronic credit
ledger under the head of IGST only
needs to be considered or total input
tax credit available in electronic credit
ledger, under the heads of IGST,
CGST and SGST taken together, has
to be considered.
utilized for payment of liability of IGST, it is
the total input tax credit available in
electronic credit ledger, under the heads of
IGST, CGST and SGST taken together, that
has to be considered for calculation of
interest under rule 88B of CGST Rules and
for determining as to whether the balance in
the electronic credit ledger has fallen below
the amount of wrongly availed input tax
credit of IGST, and to what extent the
balance in electronic credit ledger 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 sub-section (3) of
section 50 of CGST Act if, during the time
period starting from such availment and up
to such reversal, the balance of input tax
credit (ITC) in the electronic credit ledger,
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 electronic
credit ledger 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
electronic credit ledger 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 electronic credit
ledger under heads of IGST, CGST and
SGST taken together falls below such
amount of wrongly availed IGST credit, and
will attract interest as per sub-section (3) of
section 50 of CGST Act, read with section 20
of Integrated Goods and Services Tax Act,
2017 and sub-rule (3) of rule 88B of CGST
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Rules.
2.
Whether the credit of compensation
cess available in electronic credit ledger
shall be taken into account while
considering the balance of electronic
credit ledger for the purpose of
calculation of interest under sub-rule
(3) of rule 88B of CGST Rules in
respect of wrongly availed and utilized
IGST, CGST or SGST credit.
As per proviso to section 11 of Goods and
Services Tax (Compensation to States) Act,
2017,
input
tax
credit
in
respect
of compensation cess on supply of goods and
services leviable under section 8 of the said
Act can be utilised only towards payment of
compensation cess leviable on supply of goods
and services. Thus, credit of compensation cess
cannot be utilized for payment of any tax under
CGST or SGST or IGST heads and/ or
reversals of credit under the said heads.
Accordingly, credit of compensation cess
available in electronic credit ledger cannot be
taken into account while considering the
balance of electronic credit ledger for the
purpose of calculation of interest under sub-
rule (3) of rule 88B of CGST Rules in respect
of wrongly availed and utilized IGST, CGST
or SGST credit.
3.
It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
4.
Difficulty, if any, in implementation of this Circular may please be brought to the notice of the
Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
