Taxation - GSTQuestion 5621 of 512
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Question 7 (a) Mr. Ranjan availed ITC of ` 1,00,000 in GSTR-3B for the month of June, 2024. The Output tax liability for June 2024 was Nil. His intra-State output supply for the month of July 2024 was ` 5,00,000 (excluding GST). He utilized the available ITC against the output tax liability for the month of July 2024 while 2 Vishwakarma Technical Institute qualifies as an educational institution since it is an ITI which provides courses notified under Apprentices Act, 1961, i.e. approved vocational education courses. 3 It has been most logically assumed that ` 19,500 is room rent charges for ICCU. filing GSTR-3B. Mr. Ranjan found on 22nd September, 2024 that he wrongly availed ITC of ` 1,00,000 in the month of June 2024. He reversed the unutilized amount of wrongly availed ITC standing in credit ledger on 30th September, 2024 and paid the utilized amount of ITC by cash. The GST rate is 18%. Calculate the interest payable under the applicable GST law, if Mr. Ranjan filed: (i) Form GSTR-3B for the month of June 2024 on 19 July, 2024. (ii) Form GSTR-3B for the month of July 2024 was filed on 25 August, 2024. (Note: The due date of filing of GSTR-3B is 20th day of the following month. But the due date of filing of GSTR-3B was extended to 22nd August, 2024 for the month of July 2024) (5 Marks) (b) Briefly discuss the provisions related to inspection and verification of goods in transit as laid in Rule 138C of CGST Rules, 2017. (5 Marks)

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Detailed Solution & Explanation

∗∗(a)ComputationofInterestPayablebyMr.Ranjanu/s50(3)oftheCGSTAct,2017:∗∗<br>1.∗∗GSTOutputLiabilityforJuly2024:∗∗Outputtaxliability=‘5,00,000×18%=90,000‘.Mr.RanjanutilizedthewronglyavailedITCof‘1,00,000‘topaythisoutputliabilityof‘90,000‘whenfilingGSTR−3BforJuly2024.2.∗∗UtilizedandUnutilizedITC:∗∗−TotalwronglyavailedITC=‘1,00,000‘−Utilizedportion=‘90,000‘−Unutilizedportionremaininginthecreditledger=‘10,000‘UnderSection50(3),interestispayableonlyontheportionofITCwhichhasbeenwronglyavailedand∗∗utilized∗∗.Nointerestispayableontheunutilizedamountof‘10,000‘.3.∗∗DateofUtilization:∗∗AsperExplanation2toSection50(3),thedateofutilizationofITCistheearlierof:−Theduedateoffilingthereturnu/s39forthemonthinwhichsuchutilizationtookplace(July2024duedatewasextendedto∗∗22ndAugust,2024∗∗)−Theactualdateoffilingthereturn(filedon∗∗25thAugust,2024∗∗)Therefore,thedateofutilizationis∗∗22ndAugust,2024∗∗.4.∗∗PeriodofDelayandInterest:∗∗−Dateofpayment/reversal=∗∗30thSeptember,2024∗∗−Periodofdelay=From23rdAugust,2024to30thSeptember,2024(bothdaysinclusive)=∗∗39days∗∗(9daysofAugust+30daysofSeptember).−Applicableinterestrate=∗∗18−Interest=‘90,000×18%×39/365=1,731‘(roundedoff).∗Interestis‘1,731(consistingof‘865.50underCGSTand‘865.50underSGST).∗<br><br>∗∗(b)Provisionsrelatedtoinspectionandverificationofgoodsintransit(Rule138C):∗∗1.∗∗PartAandPartBReports:∗∗AsummaryreportofeveryinspectionofgoodsintransitshallberecordedonlinebytheproperofficerinPartAofFormGSTEWB−03within24hoursofinspection.ThefinalreportofphysicalverificationshallberecordedonlineinPartBofFormGSTEWB−03within3daysofsuchinspection.2.∗∗ExtensionofTime:∗∗TheCommissioneroranyofficerauthorizedbyhimmay,onsufficientcausebeingshown,extendthetimeforrecordingthefinalreportinPartBforafurtherperiodnotexceeding3days.3.∗∗CalculationofTime:∗∗Theperiodof24hoursand3daysshallbecountedfromthemidnightofthedateonwhichthevehiclewasintercepted.4.∗∗SinglePhysicalVerification:∗∗WherephysicalverificationofgoodsbeingtransportedhasbeendoneatoneplacewithintheState/UTorinanotherState/UT,nofurtherphysicalverificationshallbecarriedoutagainunlessspecificinformationrelatingtoevasionoftaxismadeavailablesubsequently.\displaystyle **(a) Computation of Interest Payable by Mr. Ranjan u/s 50(3) of the CGST Act, 2017:** <br> 1. **GST Output Liability for July 2024:** Output tax liability = `5,00,000 \times 18\% = 90,000`. Mr. Ranjan utilized the wrongly availed ITC of `1,00,000` to pay this output liability of `90,000` when filing GSTR-3B for July 2024. 2. **Utilized and Unutilized ITC:** - Total wrongly availed ITC = `1,00,000` - Utilized portion = `90,000` - Unutilized portion remaining in the credit ledger = `10,000` Under Section 50(3), interest is payable only on the portion of ITC which has been wrongly availed and **utilized**. No interest is payable on the unutilized amount of `10,000`. 3. **Date of Utilization:** As per Explanation 2 to Section 50(3), the date of utilization of ITC is the earlier of: - The due date of filing the return u/s 39 for the month in which such utilization took place (July 2024 due date was extended to **22nd August, 2024**) - The actual date of filing the return (filed on **25th August, 2024**) Therefore, the date of utilization is **22nd August, 2024**. 4. **Period of Delay and Interest:** - Date of payment/reversal = **30th September, 2024** - Period of delay = From 23rd August, 2024 to 30th September, 2024 (both days inclusive) = **39 days** (9 days of August + 30 days of September). - Applicable interest rate = **18% p.a.** - Interest = `90,000 \times 18\% \times 39/365 = 1,731` (rounded off). *Interest is ` 1,731 (consisting of ` 865.50 under CGST and ` 865.50 under SGST).* <br> <br> **(b) Provisions related to inspection and verification of goods in transit (Rule 138C):** 1. **Part A and Part B Reports:** A summary report of every inspection of goods in transit shall be recorded online by the proper officer in Part A of Form GST EWB-03 within 24 hours of inspection. The final report of physical verification shall be recorded online in Part B of Form GST EWB-03 within 3 days of such inspection. 2. **Extension of Time:** The Commissioner or any officer authorized by him may, on sufficient cause being shown, extend the time for recording the final report in Part B for a further period not exceeding 3 days. 3. **Calculation of Time:** The period of 24 hours and 3 days shall be counted from the midnight of the date on which the vehicle was intercepted. 4. **Single Physical Verification:** Where physical verification of goods being transported has been done at one place within the State/UT or in another State/UT, no further physical verification shall be carried out again unless specific information relating to evasion of tax is made available subsequently.

Key Concepts to Understand

Supply

Total amount of a good available to consumers.

Ledger

The principal book of accounts in which all business transactions are classified and posted under separate account heads. It is also called the 'Book of Final Entry' or the 'King of All Books'.

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