GST update on Jharkhand High Court decision for no interest for tax paid under wrong head 135/2020-21

There were lot of mistakes committed by the taxpayers during the initial years of GST implementation and one of common mistake was payment of tax under wrong head. Although, there is specific provision in section 77 of CGST Act, 2017 and section 19 of the IGST Act, 2017 that no interest shall be payable for payment of tax under wrong head by the assessee but the revenue department in the case of SHREE NANAK FERRO ALLOYS (P.) LTD. [2020 (114) taxmann.com 302 (Jharkhand) had demanded interest for payment of tax under wrong head. Therefore, the assessee filed writ petition before the Hon’ble Jharkhand high court with respect to non-levy of interest on wrong payment of tax and allowing adjustment of excess tax paid by then. The analysis of the decision is the subject matter of discussion of the present update.
In this case, the petitioner, while filing GSTR-1 for the month September 2017, declared IGST liability amounting to Rs 7451127 under the IGST and Rs 268470 under the head CGST and SGST each. But while filing GSTR-3B for the same month, it mistakenly declared tax liability of Rs. 3252484.58 under the head IGST and Rs 4198643.71 under the CGST and GST head. This mistake of payment of tax under wrong head remained unnoticed for 1 year and subsequently, the petitioner Company was informed of the mistake during the course of audit by CERA and the petitioner was asked to pay the short paid IGST to the tune of Rs.41,98,842/- along with the interest.
The petitioner contends that tax was paid within time but paid under the wrong head due to some confusion in early year of GST implementation. This petitioner prayed that, it is bona fide mistake on his part and should be condoned by department.
The revenue contended that GSTR-1 was filed correctly by the taxpayer and so payment of taxes under wrong head in GSTR-3B does not indicate bonafides of the petitioner. Further, there is no provision for transfer / adjustment / utilization of paid tax from one head to the other head and accordingly, the provisions of section 77 of the CGST Act, or section 19 of the IGST Act, shall not be applicable in the present case. It was contended that the provisions of section 77 of CGST Act, 2017/ section 19 of the IGST Act, 2017 will not apply in the present case as the petitioner deliberately paid wrong taxes in GSTR-3B filed by them whereas reflected correct details in GSTR-1.
The Hon’ble High Court observed that the petitioner Company had discharged their tax liability under the IGST head, but inadvertently the petitioner deposited the amount under the CGST head. It is not the case that the petitioner Company has concealed the transaction or has committed any fraud in discharging its tax liability. Further, the petitioner cannot be doubted as due to initial stage of GST regime, there is possibility of confusion as regards the correct head for deposition of tax. Consequently, the Hon’ble High Court directed the petitioner to deposit the amount of Rs. 41,98,642/-, under the IGST head and claim refund of the said amount paid in CGST head or adjust the excess amount against their future liabilities. The petitioner shall not be liable to pay any interest on the said amount.
The above decision indicates the pro-revenue approach of the officers inspite of clear cut provisions regarding no levy of interest on payment of tax under wrong head. The above decision loses relevance in the present time as now the GST portal offers inter head transfer of amount in the electronic cash ledger in case of mistake in deposition of tax under wrong head vide PMT-09 so there is no need to file refund claim by the assessees which is herculean task.
This is solely for educational purpose.
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GST update on Jharkhand High Court decision for no interest for tax paid under wrong head 135/2020-21

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