Clarification in respect of refund of tax specified in section 77(1) of the DGST Act and section 19(1) of the IGST Act

Refund of wrongfully paid tax: taxpayers can claim refund when supply characterisation changes, subject to a two year limit.

Tax paid under an incorrect head because of mischaracterisation of supply may be refunded where the supply is later found to be of the opposite character, whether the revision is made by the taxpayer or by tax authorities; refund claims must be filed electronically in the prescribed form within two years from payment of tax under the correct head, with the two year period running from the notification's effective date for payments made earlier, and refunds are excluded where adjustment was effected by issuance of a credit note.