Answer

1. F

   Facts

   If the supplier was in fact paid within 180 days, show the bank proof. If not, the ITC should have been reversed and interest is due; paying early reduces penalty.

2. P

   Provisions and law

   • Rule 37, CGST Rules 2017If the supplier is not paid within 180 days of the invoice, the proportionate ITC is shown as reversed in the GSTR-3B for the tax period immediately after the 180 days, with interest under Sec 50; it is re-availed once payment is made. Not applicable to reverse charge supplies, and to deemed supplies without consideration.
   • Sec 73(5), CGST Act 2017A person may pay tax with interest before a Sec 73 notice is issued and inform the officer; no penalty is then payable.
   • Sec 74A(8), CGST Act 2017Under Sec 74A, paying tax and interest before the notice means no penalty in non-fraud cases; in fraud cases a 15 percent penalty is also paid.
3. A

   Analysis

   Prepare a list of invoices in the notice with invoice date, payment date and amount. Where payment was within 180 days, attach proof. Where later, show that the ITC was reclaimed only after payment, which reduces the issue to interest. Pay what is due through DRC-03 before the show cause notice for the lowest cost.

4. C

   Conclusion

   1. 1List invoices with dates of invoice and payment.
   2. 2Attach payment proof for each.
   3. 3Compute interest on late ones.
   4. 4Pay through DRC-03 and reply.

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