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TMI BlogCalculation under Rule 42X X X X Extracts X X X X X X X X Extracts X X X X ..... Sir/madam, A transporter is supplying taxable as well as exempted supplies and also reversing ITC in monthly 3B returns as per the ration of exempted and taxable supplies for the month. In a whole year, party has reversed Rs. 8 lakh. Now department has taken up the issue and calculation done on yearly basis, they directed the party to pay Rs. 52 lacs more. The method of calculation is same, the difference is monthly and yearly. Rule 42 also says to calculate at the end of year. Please guide how the interest will be calculated. Total 60 lakh to be paid . In some months ITC availed only Rs. 1 lakh but in some months it is about Rs. 20 lakh. can we take average amount 60/11=5 lakh per month for interest calculation? or interest a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd penalty can be avoided ? - Reply By Amit Agrawal - The Reply = Rule 42 (2) (a) reads as follows: 9[Except in case of supply of services covered by clause (b) of paragraph 5 of the Schedule II of the Act , the input tax credit] determined under sub-rule (1) shall be calculated finally for the financial year before the due date for furnishing of the return for the month of September following the end of the financial year to which such credit relates, in the manner specified in the said sub-rule and- (a) where the aggregate of the amounts calculated finally in respect of D1 and D2 exceeds the aggregate of the amounts determined under sub-rule (1) in respect of D1 and D2 , such excess shall be 10[reversed by the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered person in FORM GSTR-3B or through FORM GST DRC-03 ] in the month not later than the month of September following the end of the financial year to which such credit relates and the said person shall be liable to pay interest on the said excess amount at the rate specified in sub-section (1) of section 50 for the period starting from the first day of April of the succeeding financial year till the date of payment ; or - Reply By vijay kumar - The Reply = Annual reconciliation is mandatory under Rule 42 . If any excess amount is required to be paid than what was reversed on monthly basis, same needs to be paid before 20th October of the next FY.. Otherwise, interest needs to be paid from 1st April of the next FY till the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of payment. If paid before issuance of SCN, no penalty provided it is not a case of suppression u/s 74 . - Reply By Rajesh Kumar - The Reply = The said non reversal/ payment is noticed by the GST officers during their visit. Therefore, the are insisting to pay under section 74(5) . - Reply By Amit Agrawal - The Reply = what are your grounds and reasoning for non-reversal of ITC earlier? - Reply By KASTURI SETHI - The Reply = Such reversal is not on your own. The amount is being reversed on being pointed out by the department. Hence not voluntary reversal. - Reply By Shilpi Jain - The Reply = You can take a stand that there was no suppression of the fact that the reversal was supposed to be done since you had in your monthl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y returns disclosed reversal u/s 42 . Hence contest the penalty. - Reply By Rajesh Kumar - The Reply = Ma'am , party was continuously availing and utilising as per their requirements and now, the same is noticed by department. Can we take stand that we have time to file GSTR-9 and accordingly we have time ? On this basis, can department waived off penalty u/s 74 of CGST Act 2017 . if yes, then what if last date to file GSTR 9 has been gone but the same is pending to file ? - Reply By Amit Agrawal - The Reply = Levy of penalty u/s 73 or 74 has no direct relationship with the fact that whether GSTR-9 was filed or not. Section 59 states as follows: Every registered person shall self-assess the taxes paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under this Act and furnish a return for each tax period as specified under section 39 . And return u/s 39 is Form GSTR-3B. However, the fact of non-filing of GSTR-9 ( presumably, when required not filed though due date is gone ) - in itself - cannot be used by you to avoid penalty u/s 74 . Actually, if you try this argument, this fact will be used against you by Dept. Penalty u/s 74 can be avoided only if you can prove that ingredients to levy penalty under that section does not exist in a given situation. These are strictly personal views of mine and the same should not be construed as professional advice / suggestion. - Reply By Amit Agrawal - The Reply = With due respect, I disagree with the proposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that just because of the fact that 'assesses has shown reversal u/s 42 in the monthly return/s as per Rule 42 (1) ', he can avoid penalty u/s 74 against 'non-reversal of excess ITC as per Rule 42 (2) (a) , within the time-limit permitted therein'. As per said 42 (2) (a) (as reproduced in post No. 1 above), such excess shall be 10[reversed by the registered person in FORM GSTR-3B or through FORM GST DRC-03 ] in the month not later than the month of September following the end of the financial year to which such credit relates . These are strictly personal views of mine and the same should not be construed as professional advice / suggestion. - Reply By Amit Agrawal - The Reply = In the context under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion, I wish to draw attention to 'Explanation 2' u/s 74 which reads as follows: For the purposes of this Act, the expression suppression shall mean non-declaration of facts or information which a taxable person is required to declare in the return , statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer. - Calculation under Rule 42 - Query Started By: - Rajesh Kumar Dated:- 4-7-2022 Goods and Services Tax - GST - Got 10 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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