Depositing GST on the wrong head

[Balakrishna]

Dear Sirs, 

1. During 2018-19 Rs. 19,000 tax was wrongly deposited as IGST instead of CGST & SGST

2. Business was closed due to Corona in April 2021 and the GST Registration was cancelled in November 2021

3. During assessment now, the Dept is demanding Rs. 19K as correct tax and 25% penalty (about 5K)

My querry is: 

1. While the section 77 (2) and 19 (2) explicitly mention about not charging interest under this circumstance, there is no specific mention about not charging penalty. Section 122 lists 21 situations under which penalty is applied which doesn't cover this situation. Depositing under wrong head which does not amount to loss of revenue to Govt. need not attract penalty.  

Please help provide specific reference for not charging Penalty. Anyway, upon depositing right tax, IGST will get refunded. Don't want to pay penalty for no wrong. 

2. Is there any specific section, clause or rule to get the refund directly to the Bank account instead of electronic cash ledger as the GST registration of the entity is cancelled. There is a Kerala High Court judgement of 2018 directing the Dept to refund directly to the Bank Account

AI Summary

Depositing GST under the wrong head should not attract penalty; refunds payable to bank if registration is cancelled.
Misclassification of GST payment (depositing IGST instead of CGST and SGST) is treated as a clerical classification error that causes no revenue loss and thus, under Section 77(2) and Section 19(2), interest and penalty are not chargeable; contributors cite Rejimon Padickapparambil Alex (Kerala HC, 2024), Board Circular No.192/04/2023, and Circular No.162/18/2021-GST. When registration is cancelled, Section 54(1) permits any person to claim refund and refunds should be paid to the taxpayer's bank account rather than credited to an electronic cash ledger reserved for registered persons.