TaxTMI 
TaxTMI 
25 Jan 2020 
The Hon'ble High Court of Jharkhand has ruled on 18.12.2019 in the case of SHREE NANAK FERRO ALLOYS PVT. LTD. VERSUS THE UNION OF INDIA THROUGH THE COMMISSIONER, CENTRAL GOODS AND SERVICES TAX AND CENTRAL EXCISE, RANCHI., THE SUPERINTENDENT, RANGE-I, CENTRAL GOODS & SERVICES TAX AND CENTRAL EXCISE, RAMGARH [2020 (1) TMI 833 - JHARKHAND HIGH COURT] that the tax paid incorrectly under CGST head will be refunded but the taxpayer has to pay tax under correct head IGST.
The petitioner, M/s. Shree Nanak Ferro Alloys Pvt. Ltd., had filed GSTR-1 for the month of September, 2017 by showing IGST liability as ₹ 74,51,127/-, CGST liability as ₹ 2,68,470/-, and SGST liability as ₹ 2,68,470/-. Subsequently, when the petitioner submitted his GSTR- 3B, he mentioned IGST liability as ₹ 32,52,484.58/- as against the actual liability of ₹ 74,51,127/-, and CGST liability was shown as ₹ 44,67,113.71/- as against the actual liability of ₹ 2,68,470/-. In net effect the IGST liability was a shown less by ₹ 41,98,642.42/- in GSTR-3B, whereas in the CGST the excess liability was shown to the tune of ₹ 41,98,643.71/-, and the tax was also paid accordingly.
The aforesaid mistake was noticed when the scrutiny of GSTR-I and GSTR-3B was conducted in the course of CERA audit. A letter dated 01.11.2018 was issued on the petitioner asking to make the payment of IGST along with the interest. The petitioner replied to the said letter on 19.11.2018 stating that tax due under IGST was paid but inadvertently it was paid under CGST head instead of IGST head. Also, it was mentioned that the mistake happened in early phase of implementation of GST i.e. September, 2017 and hence adjustment of the said amount may be made under correct head.
The submission of the petitioner was not accepted by the respondent. The respondent also stated that while filing GSTR-1 the petitioner was fully aware of the fact that supply is inter-state supply and accordingly shown IGST correctly. However, while filing GSTR-3B the supplier has deliberately considered the supply as intra-state supply and shown the liability under CGST head. Hence, vide letter dated 26.04.2019 the respondent has asked the petitioner to pay short paid IGST under correct head along with interest within a period of one week failing which an appropriate action would be taken under GST Act. Aggrieved by the letter the petitioner has filed petition in High Court of Jharkhand.
After considering the submissions made by the petitioner and the CGST authority the High Court came to the conclusion that the petitioner had discharged their tax liability, but inadvertently made the payment under CGST head instead of IGST. The contention of the CGST authority that there is no provision for cross utilisation of credit of CGST against IGST is accepted. But the denial of benefit of section 77(1) of CGST Act, and section 19(2) of IGST Act to the petitioner which allows the taxpayer to seek refund of tax paid under CGST and welcoming the payment of tax under correct head of IGST without interest on the ground that this provision is applicable to bonafide taxpayer only is not acceptable because there is no fact substantiating the wrong intention of the taxpayer by merely paying tax under CGST instead of IGST.
In view of the matter, the Hon'ble High Court directs the petitioner Company to deposit the amount of ₹ 41,98,642/-, under the IGST head within a period of 10 days from the date of decision, towards the liability of September, 2017. The petitioner shall not be liable to pay any interest on the said amount. The petitioner shall also be entitled to get the refund of the amount of ₹ 41,98,644/- deposited by them under the CGST head, or they may get the amount adjusted against their future liabilities, in accordance with law, as they may choose.
Consequently, the letter dated 26.04.2019, issued by the respondent burdening the petitioner Company with the liability to pay the short paid IGST, amounting to ₹ 41,98,642/-, along with interest, is hereby, quashed.