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Issues: Whether IGST paid on a transaction subsequently found to be an intra-state supply could be adjusted against CGST and SGST, or whether the petitioner had to pay CGST and SGST and seek refund of the IGST under the statutory refund mechanism.
Analysis: The relevant provisions provide a refund mechanism where tax is paid under the wrong head and the transaction is later held to fall under a different tax category. Section 77 of the Central Goods and Services Tax Act, 2017 and Section 19(1) of the Integrated Goods and Services Tax Act, 2017 contemplate refund of tax wrongly paid, while the refund procedure is governed by the prescribed rules. The Court held that directing an adjustment of IGST against CGST and SGST would amount to creating a procedure not provided by the statute and would go beyond the legislative framework.
Conclusion: The petitioner could not insist on adjustment of IGST against CGST and SGST and was required to comply with the show-cause notice and pay the CGST and SGST demanded, while retaining the liberty to seek refund of the IGST paid erroneously.
Ratio Decidendi: Where a taxing statute provides a specific refund mechanism for tax paid under the wrong head, courts cannot order inter-head adjustment in the absence of an express statutory provision.
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