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

Incorrect IGST rate declaration triggers remedial options: penalty/waiver, remit with interest and claim refund under GST procedures. Incorrect IGST declaration on export invoices led to a refund at the lower rate while the AO seeks the differential tax. The primary legal positions are that the error is a procedural lapse attracting penalty (with possible administrative waiver) rather than a fresh tax demand, and practical remedies include remitting the differential tax with interest and filing for refund via the prescribed refund procedure (manual application under refund rules or Form RFD-01), or pursuing representations to the Commissioner and litigation if required.