GST paid under wrong head can be adjusted under another: High Court
Section 77 provides for the refund of the tax paid mistakenly under one head instead of another. The Kerala High Court at Ernakulum in November ruled that any GST mistakenly paid under one head can be adjusted under the correct head.
It was further observed that where the amount of refund is completely adjusted against any outstanding demand under the Act, an order giving details of the adjustment is to be issued in Part A of FORM GSTRFD-07.
The petitioner’s counsel lays stress on this process of adjustment and asserts that the amount remitted under one head can be adjusted under another head, for the demand can be any amount under the Act.
The petitioner, a registered dealer, has purchased certain goods from Chennai and then transported to Kerala. When the goods were in transit, the Assistant State Tax Officer, detained the goods and issued notice dated 30.09.2018. The consignor paid the tax and penalty and the remittance was made under the head SGST. The petitioner, who is the consignee and transporter, insists that the consignor paid the tax and penalty under that only based on the ASTO’s directions. But the fact remains that the remittance must have been under the head ‘IGST’. So, the authorities have refused to release the goods. Aggrieved, the petitioner has filed a writ petition.
The Hon’ble High Court of Kerala in the case of Saji S Vs Commissioner, State GST Department Tax Tower, vide order no 35868 of 2018, dated November 12, 2018 ruled that as per section 77 of CGST Act, provides for the refund of the tax paid mistakenly under one head instead of another. But Rule 92 of the CGST Rules states that where the amount of refund is completely adjusted against any outstanding demand under the Act, an order giving details of the adjustment is to be issued in Part A of Form GST RFD-07. There is no difficulty for the respondent officials to allow the petitioner’s request and get the amount transferred from the head ‘SGST’ to ‘IGST’. It may, as the Government Pleader has contended, take some time, but it is inequitable for the authorities to let the petitioner suffer on that count. However, the respondent shall release the goods forthwith along with the vehicle and, then, ensure that the tax and penalty already stood remitted under the ‘SGST’ is transferred to the head ‘IGST’.