EXPORT FIRM MATTER

[Dilipkumar Sharma]

Dear All,

An export firm filed returns of 2022-23 under rate of 12% instead of 18%. The GSTR-1 invoice filed was under IGST Paid and as such the refund of same amount was received @12% only. The firm came under GST Audit by dept. and now the AO is asking to pay the difference of 6% of IGST tax as it was not correctly shown at the time of filing GSTR-1.

Issue is now what will happen to the tax amount if paid now ? As no revenue loss to Govt. in this matter as IGST was less paid and same amount of refund was received.

Please suggest in the matter and suggest remedy as per law if any.

[KASTURI SETHI]

It being a procedural lapse only, the demand cannot be raised. Only penalty is imposable under Section 125 of CGST Act.

The best recourse is, you should take shelter of Section 126 for waiver of penalty.

[Dilipkumar Sharma]

Thanks a lot for reply Kasturiji. This is what was explained to the officers but they are not ready to understand anything and is asking to pay the difference of tax @6% which comes to approx 5.00 lakh. Also no refund of same amount will be given. Can you suggest any more information so same can be again explained to the officers ?

[KASTURI SETHI]

(i) Write to the jurisdictional Commissioner and convey your problem in person. Govt. is liberal regarding the export.

(ii) Your firm has earned foreign exchange for our country by exporting goods, you have worked in the interest of Indian Economy and, in turn, in the interest of our nation.

Technicalities should not be a stumbling block.

[Shilpi Jain]

In case you get a notice you may get relief at Tribunal (if it is set up)/HC level.

Dept officers sometimes look only one track and do not understand that this is a revenue neutral situation.

[Raam Srinivasan Swaminathan Kalpathi]

Another option available is to remit the difference IGST of 6% with applicable interest under Sec.50 and then claim refund by either filing a manual application under Rule 97A or make an application under 'Other' category in the portal.  Form RFD-01.  

[Padmanathan KV]

I agree with the view of Sri RaamSrinivas Kalpathi sir. It would be more practical. The refund should not be denied as it is within time limit also.

AI Summary

Export Firm Faces GST Audit for Filing Error, Seeks Penalty Waiver Under Section 126, Considers Appeal Options An export firm mistakenly filed returns for 2022-23 at a 12% GST rate instead of the correct 18%, resulting in a refund at the lower rate. During a GST audit, authorities demanded payment of the 6% difference. One respondent suggested that since this is a procedural error, only a penalty under Section 125 of the CGST Act could be imposed, and recommended seeking a penalty waiver under Section 126. Another advised appealing to higher authorities or pursuing relief through the Tribunal or High Court. A practical solution proposed was to pay the difference with interest and apply for a refund.