Wrong-head IGST payment may be adjusted against CGST and SGST where the full tax liability was timely discharged.

Tax mistakenly remitted under the IGST head may be appropriated towards CGST and SGST liabilities where the entire tax liability has already been discharged. Section 19 of the IGST Act, Section 77 of the CGST Act and Rule 89(1A) apply when the nature of a supply is subsequently determined differently, not to inadvertent payment under an incorrect tax head. Requiring fresh CGST and SGST payment before refunding IGST would penalise a taxpayer despite timely payment. The conflicting portion of the rectification order is to be set aside.

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Issues: Whether tax paid under the IGST head by mistake, where the entire liability was discharged, could be appropriated towards CGST and SGST liability without requiring fresh payment followed by refund.

Analysis: Section 19 of the Integrated Goods and Services Tax Act and the corresponding Section 77 of the Central Goods and Services Tax Act, along with Rule 89(1A) of the Central Goods and Services Tax Rules, apply where the nature of the supply is subsequently determined differently, and do not govern an inadvertent remittance under the wrong tax head. The rectification order recorded that the entire tax liability had already been discharged under the IGST head. Requiring fresh payment of CGST and SGST before refunding the IGST amount would therefore penalise the taxpayer despite timely discharge of the tax liability.

Conclusion: The amount remitted under the IGST head shall be appropriated towards the CGST and SGST liability. The rectification order is set aside to the extent that it conflicts with this direction.

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