regarding wrong payment IGST Tax

[FARIDUDDIN AHMAD]

respected sir, my issue is that IGST Liability of Rs-230000/- for the month of Nov 2017 due to mistake has been paid to CGST Rs-115000/- and SGST Rs-115000/-. SCN U/s 74 to deposit short payment of IGST Rs-230000/- has been issued. can the wrong payment to CGST and SGST of IGSTbe allowed

[FARIDUDDIN AHMAD]

let me clarify that in GSTR-1 for Nov 2017 correct figures of IGST , CGST and SGST taxable outward supply and tax has been declared. but while filing GSTR-3B owing to the mistake in declaring correct figure in colum 3.1(a), wrong payment of tax has been made through GSTR-3B.

[KASTURI SETHI]

First you will have to pay GST under correct Heading/type of tax and thereafter, apply for refund claim for the tax paid in wrong heading. In such case one High Court has decided such issue in favour of the department.

[Amit Agrawal]

No penalty u/s 74 in given situation should be levied. If SCN u/s 74 is issued, same needs to be defended before original adjudicating authority explaining factual position. No interest u/s 50 (1) should be levied in given situation, in view of Section 19 (2) of the IGST Act, 2017.

Taxes wrongly paid in given situation can be claimed as refund u/s 77 (1) of the CGST Act, 2017. However, one needs to pay correct taxes (i.e. IGST), seek relief from interest u/s 50 (1) as well as penalty u/s 74 and then, claim refund of wrong taxes paid (i.e. CGST & SGST) earlier.

Please also see rule 89 (1A) for time-limit to claim subject refund.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Sadanand Bulbule]

Dear querist.

While humbly agreeing the valuable advice of the esteemed experts, the following judgements would help in resolving the issue under discussion.

1. The division bench judgement dated 08/10/2021 rendered by the Hon’ble Punjab & Haryana High Court in the case of SBI CARDS & PAYMENT SERVICES LIMITED VERSUS UNION OF INDIA AND OTHERS P&H. [2021 (11) TMI 229].

2. The division bench of Hon'ble Jharakhand High Court in its judgement dated 18/12/2019 rendered 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].

3.The said judgements clarify the provisions contemplated under Section 77 of the GST Act and Section 19 of the IGST Act and elucidate upon the provisions relating to adjustment of GST paid under wrong head.

[Shilpi Jain]

Also refer to Circular No. 162/18/2021-GST which has set out that the time limit for claiming refund would start from the date of payment of the right tax.

[Padmanathan KV]

I have a difference of opinion. In my view, the situation mentioned by the querist does not fall under Section 77 of CGST Act and Section 19 of IGST Act since it is not a case where intra-state supply has been treated as inter-state supply or vice-verse. From the query, it is understood that it is a case of wrong reporting in GSTR-3B only (as the supply has been correctly reported in GSTR-1).

In my opinion, tax has to be deposited under the correct head and refund has to be applied for CGST and SGST. Refund application can be filed only under "excess tax paid" or "others (specify)". The Department may try to deny refund stating that it is time barred but there are plethora of judgments in erstwhile regime holding that time limit does not apply to any amount wrongly deposited as tax.

Another challenge would be the interest levy as this situation is not covered under Sec. 77.

[Sadanand Bulbule]

My dear Padmanathan ji

I request you to look at the intrinsic objectivity of Section 77 of the GST Act with fresh perception conjointly with the settled law on precisely the same issue in two judgments of the Hon'ble High Court followed by the CBIC Circular referred above.

It throws more than enough bright light to dispel the doubts.

[KASTURI SETHI]

The querist should also read this case law

2022 (8) TMI 589 - ANDHRA PRADESH HIGH COURT M/S. WALCHANDNAGAR INDUSTRIES LIMITED, VERSUS THE ASSISTANT COMMISSIONER (ST) , THE APPELLATE JOINT COMMISSIONER (ST) , THE CHIEF COMMISSIONER OF STATE TAX, THE STATE OF ANDHRA PRADESH,

[Padmanathan KV]

Ld Sadanand Bulbule sir,

I fully endorse your views sir. But there is a practical challenge while filing the refund application u/s 77 read with 54. The tax payer has to file a Statement-6 under rule 89(2)(j) along with refund which matches data from GSTR-1. Since in this case GSTR-1 has been correctly filed, there will be practical difficulty in filing this Statement-6.

Hence I was of view that in this situation refund has to be filed under "excess tax paid" or "others" category. Nevertheless, I understand and appreciate your views sir

AI Summary

Refund of wrongly paid GST: taxpayer should pay correct IGST and then seek refund of amounts paid under wrong heads.
Taxpayer erroneously paid IGST liability as CGST and SGST in GSTR 3B despite correct reporting in GSTR 1; advisory consensus is to deposit tax under the correct IGST head, then claim refund of amounts paid under the wrong heads through refund provisions for excess or wrongly paid tax. Practitioners cite judicial decisions and a CBIC circular treating refund time limit as running from payment of the correct tax, note practical reconciliation challenges with Statement 6 and GSTR 1 data, and warn interest and penalty exposure will turn on whether the correct IGST is deposited and the facts presented in adjudication.