Once the reduction in output tax liability mismatch has been rectified, whether the supplier is eligible for refund of the interest paid on the differential tax paid due to such mismatch?

1. As per Section 43(9) of the CGST Act, once the discrepancy in the reduction of output tax liability is rectified and such rectification is accepted, then the supplier is eligible to refund of interest paid earlier.
2. The maximum interest refundable is equivalent to the interest paid by the recipient. The supplier has to make a claim for such refund in FORM GSTR-3.
3. The interest to be refundable will be credited to the electronic cash ledger in FORM GST PMT-3 and will be available for any future payment of interest.
4. Alternatively, the supplier can claim the refund of such amount by following the procedure set out in Section 54 of the CGST Act.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.46)