Answer

1. F

   Facts

   Interest under Sec 50 is compensatory and follows the tax. If the tax is payable, interest is generally payable too. You can, however, challenge its computation.

2. P

   Provisions and law

   • Sec 50(1), CGST Act 2017Interest is payable on tax paid late for the period of delay at the notified rate (18 percent a year); on a late return it is levied only on the portion paid in cash, except where proceedings under Sec 73, 74 or 74A have started.
   • Sec 50(3), CGST Act 2017Interest is payable on ITC wrongly availed and utilised, from the date of utilisation till reversal, at the notified rate (18 percent a year).
   • Sec 73(1), CGST Act 2017Show cause notice for tax not paid, short paid or ITC wrongly availed for reasons other than fraud, for periods up to FY 2023-24.
3. A

   Analysis

   Check whether the officer charged interest on the gross amount when only the cash portion was due, or on unutilised ITC. Check the start and end dates used. Errors in the computation are common. Dispute the tax on merits and the interest on computation.

4. C

   Conclusion

   1. 1Recompute interest using correct dates and base.
   2. 2Check the cash-only rule and utilisation rules.
   3. 3Point out computation errors in the reply.
   4. 4Pay the correct amount if you accept the tax.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.