GST ITC for wrong tax charged

[Madhavan iyengar]

A supplier has charged wrong tax ie instead of CGSt/SGST he has charged IGST can the receiver claim credit of the wrong tax charged whats the solution to this

[KASTURI SETHI]

Go through Board's Circulars No.7/7/2017 dated 1.9.17, 26/26/17 dated 29.12.17 and 37/11/2018-GST dated 15.3.18.

Flyer No. 34 dated 1.1.18

Payment of Wrong Tax

Under GST it might happen that the taxable person may pay integrated tax instead of central tax plus state tax and vice versa because of incorrect application of the place of supply provisions. In such cases, while making the appropriate payment of tax, interest will not be charged and the refund claim of the wrong tax paid earlier will be entertained without subjecting it to the provision of unjust enrichment.

Guidelines issued by Haryana State Govt. on 25.5.18

D. Refund on account of payment of wrong tax

Refund is also admissible to persons who happen to make payment in the wrong account of tax. A person may make payment in the account of integrated tax whereas it was to be paid in the account of state GST or Central GST and vice versa. Similarly, a person can make payment in the account of CGST whereas it was required to be paid in account of State GST and vice versa. Section 77 of GST laws and section 19 of IGST provide that this amount shall be refunded.

However, no interest shall be charged and refund shall be allowed without subjecting it to the provisions of unjust enrichment.

AI Summary

Input tax credit remedies for wrong GST head charged allow refund or reallocation without interest or unjust enrichment. When GST is paid or charged to the incorrect tax head (for example IGST instead of CGST/SGST), the wrongly paid tax is refundable and input tax credit or refund relief may be claimed; such refunds or reallocations are to be granted without application of unjust enrichment and without charging interest on the corrective payment.