Tax paid under wrong heads of GST


Section 77 of CGST Act 2017 and Section 19 of IGST Act 2017 deals with the situation where tax paid under wrong heads.

As per Section 77(1) of CGST Act 2017, a registered person who has paid the Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.

Section 19(1) of IGST Act 2017 provides that a registered person who has paid integrated tax on a supply considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribed.

In simple words, if any person has wrongly paid CGST and SGST/UTGST instead of IGST or has paid IGST instead of CGST and SGST/UTGST, then he can claim refund of wrongly paid amount of GST.

In case an assessee has paid CGST/SGST/UTGST assuming a transaction as intra-state supply, however, subsequently held to be treated as inter-state supply, he can claim refund of such CGST/SGST/UTGST after payment of IGST.

And where, such assessee has paid IGST assuming a transaction as inter-state supply, however, subsequently held to be treated as intra-state supply, he can claim refund of such IGST after payment of CGST/SGST/UTGST.

However, such refund can be claimed only after payment of taxes under correct head.

Remedy from interest on late payment of tax to be paid under correct head

In order to protect such assessee from interest on late payment of GST payable under correct head, Section 77(2) of CGST Act 2017 and Section 19(2) of IGST Act 2017 provided that where such assessee has already paid tax under wrong head, he can pay the tax under correct head without payment of interest. However, such remedy is available only to the tune of tax already paid under wrong head.

Text of Section 77(2) is reproduced as below:-

“(2) A registered person who has paid integrated tax on a transaction considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay any interest on the amount of central tax and State tax or, as the case may be, the Central tax and the Union territory tax payable.”

Text of Section 19(2) is reproduced as below:-

(2) A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall not be required to pay any interest on the amount of integrated tax payable.

Refund of wrongly paid amount of GST

Section 54 of CGST Act 2017 provides that refund can be claimed for wrongly paid amount of GST within two years from the payment of such tax. Rule 89 of CGST Rules 2017 provides the procedure and safeguards to claim such refund.

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