No, as per Section 49(4) of the CGST Act, 2017 the amount available in the electronic credit ledger may be used for making any payment towards ‘output tax’ payable only. As per Section 2(82) of the CGST Act, 2017, ‘Output tax’ in relation to a taxable person, means the CGST/SGST chargeable under this Act on taxable supply of goods and/or services made by him or by his agent and excludes tax payable by him on reverse charge basis. Therefore, input tax credit cannot be used for payment of interest/penalty.
(ICAI FAQ PUBLICATIONS 06-09-2017 TAX PAYMENT, INTEREST, PENALTY AND OTHER AMOUNTS : FAQ NO.20)