Tax Liability Paid through Credit Instead of Cash as per Rule 86B

[ROHIT GOEL]

In a case where the tax liability was mandatorily required to be discharged in cash in accordance with Rule 86B, but was inadvertently paid through utilization of Input Tax Credit (ITC), and this irregularity has subsequently been identified during a departmental audit, whether the taxpayer is eligible to claim a refund of the tax amount earlier paid through credit, after the same liability has been correctly discharged in cash in compliance with Rule 86B?

AI Summary

Taxpayer seeks refund or re-credit of ITC used to discharge Rule 86B cash GST liability; dispute over limitation date A taxpayer inadvertently discharged a Rule 86B cash-mandated GST liability using ITC, later paid the liability in cash after departmental audit, and seeks refund or re-credit of the earlier ITC use. Forum responses note ITC is generally non-refundable except in specified scenarios, but excess tax paid can be re-credited or refunded via RFD-06 if sanctioned and within limitation. The key dispute is the 'relevant date' for limitation: some argue it is the later cash payment (the cause of action), supporting a non-time-barred claim, while the department treated the earlier ITC utilization date as relevant; CBIC guidance and case law on cause of action were recommended.