Question

During our Trans-1 audit some reversal of excess claim of CENVAT is identified. The same was claimed in RG 23 in the month of Jan` 17 but was not utilised as excess CENVAT was available during that period. Now, we have to reverse the same. My query is:

1. Whether the interest is payable from Jan 2017 (claimed in RG 23) or from the date on which TRANS-1 was filed?
2. What is rate of interest?
3. Whether any penalty is leviable as claimed by GST official giving reference of Circular no 58/32/2018-GST dated 4/09/2018.

Answer

Circular No. 58/32/2018-GST dt. 4th Sep, 2018 clarified that inadmissible transitional credit can be reversed through Table 4(B)(2) of FORM GSTR-3B.

The applicable interest and penalty shall apply on all such reversals which shall be paid through entry in column 9 of Table 6.1 of FORM GSTR-3B.
Interest on excess claimed of credit is levied as per section 50(3)even if it is not utilized. the same is reproduced below:

A taxable person who makes an undue or excess claim of input tax credit under subsection (10) of section 42 or undue or excess reduction in output tax liability under subsection (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council.

Further, Notification No. 13/2017-Central Tax, Dated 28/06/2017 prescribe rate of interest for section 50(3) @ 24%.

As in your case date of filling of TRANS-1 is the date of availment of inadmissible transitional credit in GST , therefore you are required to pay interest from the date of availment of credit in Trans 1 till the date of reversal.
But you should pay penalty only after it is imposed. There are a chances of waiver of penalty. (Reply dt.31/01/2019)