Tax Wrongfully Collected And Paid To Central Government or State Government [Section 77] - GST Ready Reckoner - GST

Tax Wrongfully Collected And Paid To Central Government or State Government Refund in case of tax wrongfully collected As per section 77(1) If a registered person has inadvertently paid Central tax or State tax/Union Territory tax considering the transaction as intra-state supply but which is subsequently held as interstate supply, the amount of CGST/SGST/UTGST tax so paid shall be refunded in such manner and subject to such conditions as may be prescribed. Similarly Section 19(1) of IGST Act provides that IGST paid on an inter-state transaction subsequently considered as intra-state supply will be refunded in such manner and subject to such conditions as may be prescribed. No Scope of Interest to be charged in case of wrong consideration of supply Further section 77(2) of CGST Act provides that no interest shall be payable on the amount of CGST and SGST/UTGST payable by him on such intra-state supply wrongly considered as inter-state supply. Similarly section 19(2) of IGST Act provides that no interest shall be payable on the amount of IGST payable by him on such inter-state supply wrongly considered as intra-state supply. Application for refund of tax, interest, penalty, fees or any other amount [ Rule 89(1A) ] Any person, claiming refund of any wrongly paid tax to Government by him [u/s 77] , may file application of refund before the expiry of a period of two years from the date of payment of the tax in wrong major head. It is file electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner. In case tax paid wrongly to government before this rule 89(1A) come into force, any payment of tax on inter-State supply before coming into force of this sub-rule, application of refund filed before the expiry of a period of two years from the date on which this sub-rule comes into force. Example Application of rule 89(1A) read with section 77 of the CGST Act / section 19 of the IGST Act is explained through following illustrations. A taxpayer A has issued the invoice dated 10.03.2018 charging CGST and SGST on a transaction and accordingly paid the applicable tax (CGST and SGST) in the return for March, 2018 tax period. The following scenarios are explained hereunder: Sl.no. Scenario Last date for filing the refund claim 1 Having realized on his own that the said transaction is an inter-State supply, A paid IGST in respect of the said transaction on 10.05.2021. Since A has paid the tax in the correct head before issuance of notification No. 35/2021-Central Tax, dated 24.09.2021 , the last date for filing refund application in FORM GST RFD-01 would be 23.09.23 ( two years from date of notification ) 2 Having realized on his own that the said transaction is an inter-State supply, A paid IGST in respect of the said transaction on 10.11.2021 i.e. after issuance of notification No. 35/2021-Central Tax dated 24.09.2021 Since A has paid the correct tax on 10.11.2021, in terms of rule 89(1A) of the CGST Rules , the last date for filing refund application in FORM GST RFD-01 would be 09.11.2023 (two years from the date of payment of tax under the correct head, i.e. integrated tax) 3 Proper officer or adjudication authority or appellate authority of A has held the transaction as an inter-State supply and accordingly, A has paid the IGST in respect of the said transaction on 10.05.2019 Since A has paid the tax in the correct head before issuance of notification No. 35/2021-Central Tax, dated 24.09.2021 , the last date for filing refund application in FORM GST RFD-01 would be 23.09.23 ( two years from date of notification ) 4 Proper officer or adjudication authority or appellate authority of A has held the transaction as an inter-State supply and accordingly, A has paid the IGST in respect of the said transaction on 10.11.2022 i.e. after issuance of notification No. 35/2021-Central Tax dated 24.09.2021 Since A has paid the correct tax on 10.11.2022, in terms of rule 89(1A) of the CGST Rules, the last date for filing refund application in FORM GST RFD-01 would be 09.11.2024 (two years from the date of payment of tax under the correct head, i.e. integrated tax) Important Notification Clarification Clarification in respect of refund of tax specified in section 77(1) of the CGST Act and section 19(1) of the IGST Act. [ See Circular No. 162/18/2021-GST dated 25.09.2021 ]