Circular, 2023

Text

Reproduced from the document India Code holds for this instrument. The Gazette prints Hindi and English side by side and this is the English; the Department's own PDF remains the authority.

OFBIER fi%‘r&m’u— 9%940)0 h%’ - 07«/ 0(9/202:5 Office of the Commissioner, State Tax, Uttar Pradesh (GST Section) Letter No. GST/2023-24/ 42 /State Tax 2 Lucknow: Dated: 01 August, 2023 To, All Zonal Additional Commissioner Grade -1, Additional Commissioner Grade -2 (S.L.B.) State Tax, Uttar Pradesh.

Subject: Clarification on charging of interest under section 50(3) of the UPGST 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 Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafier referred to as the “UPGST 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 UPGST Act, read with rule 88B of Uttar Pradesh Goods and Services Tax Rules, 2017 (hereinafter referred to as the “UPGST 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. Issuc has been examined and to ensure uniformity in the implementation of the provisions of law across the field formations, the Commissioner, in exercise of its powers conferred by section 168 of the UPGST Act, hereby clarifies the issues as under:

‘ '~ Clarification

1. | In the cases of wrong availment of | Since the amount oi:”ifiput tax credit IGST credit by a registered person and reversal thereof, for the | calculation of interest under rule 88B { of UPGST Rules, whether the balance f of input tax credit available in clectronic credit ledger under the head { available in electronic credit ledger, under [s.N Issue { I i 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 available in clectronic credit ledger, under the heads of IGST, CGST and SGST taken together, oF IGST only needs to be considered | that has o be considered for calculation of | or total input tax credit available in interest under rule 88B of UPGST Rules and electronic credit ledger, under the for determining as to whether the balance in heads of IGST, CGST and SGST the clectronic credit ledger has fallen below taken together, has to be considered. 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 UPGST 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 1TC, even if available balance of IGST credit in | clectronic 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 clectronic 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 UPGST Act, read with section 20 Of Integrated Goods and Services Tax Act, 2017 and sub-rule (3) I of rule 88B of UPGST Rules. | Whether the credit of cérfiificnéatign As per pl‘OVl section 11 of Goods and cess available in electronic credit Services Tax (Compensation to States) Act, ledger shall be taken into account| 2017, input tax credit in respccl‘ page 2 of 3 ' | while considering the balance of electronic credit ledger for the purpose | of calculation of interest under sub- rule (3) of rule 88B of UPGST Rules | in respect of wrongly availed and utilized IGST, CGST or SGST credit.

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. % R Accordingly, credit of compensation cess available in electronic credit ledger cannot be taken into account while considering the balance of clectronic credit ledger for the purpose of calculation of interest under sub- rule (3) of rule 88B of UPGST Rules in respect of wrongly availed and utilized IGST,

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 Undersigned.

Copy To:

By Order, 7[ef (Ministhy' S.) Commissioner, State Tax, U.P.

1. Joint Commissioner (L.T.), State Tax HQ, Lucknow for uploading the Circular on the Departmental Website.

T~ State Tax HQ, Lucknow.

page 30of 3

Provisions this circular answers to

Read out of the instrument itself: an enabling provision is one it says it was made under, which is the power it rests on. The rest it names without resting on.

Other instruments under the same Act

All of the The Uttar Pradesh Goods and Services Tax Act, 2017