‘No Interest on inadmissible ITC Availed, Until Utilised’ – A Move Provoked by Recent Judicial Precedents?

Rajat Chhabra and Ketan Tadsare – [2021] 130 taxmann.com 387 (Article)

Section 50(1) of the CGST Act, 2017 was amended to insert a proviso which restricts the computation of interest only on the net cash liability. Despite the GST Council’s intent to effectuate such amendment from July 2017, the amendment was given prospective effect from September, 2020. The amendment was followed by a Press Release clarifying that no recovery shall be made for the period prior to September 2020.

Now, the recommendations are made during the GST Council’s 45th Meeting to amend Section 50(3) to charge interest on wrongfully availed ITC. In this article, the authors have discussed the amendment made earlier and recent recommendations by the GST Council in light of various judicial precedents.

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