💡 Wrong Head, Right Refund: Delhi High Court Backs Refund for GST Paid Under Wrong Head

🏛️ Key Case Law:

M/s. Excel Buildtech Pvt. Ltd. vs. Commissioner of CGST,

Delhi South Court: Delhi High Court

Date of Order: 15 April 2024

Citation: 2024-VIL-225-DEL

📋 Summary of the Case:

• The petitioner, Excel Buildtech Pvt. Ltd., had wrongly paid CGST and SGST treating a transaction as intra-State.

• Later, it was established that the transaction was actually inter-State, and IGST was the correct tax.

• The company paid IGST correctly and applied for a refund of CGST and SGST.

• The department rejected the refund on the grounds that the mistake was of the taxpayer.

⚖️ Court's Ruling:

• The High Court held that Section 77 of the CGST Act and Rule 89(1A) clearly support refunds in such cases.

• Mistakes in head of tax payment (CGST/SGST vs IGST) are covered under the law.

• It directed the department to process the refund within 4 weeks.

🧾 Real-Life Example: Wrongly Paid IGST Instead of CGST + SGST

🧑‍💼 Company: ABC Traders – Registered in Telangana

📦 Transaction: Supply of goods to a buyer in Hyderabad (same state)

📌 What Actually Happened:

Return	Status	What was Done
GSTR-1	✅ Filed correctly	Supply shown as intra-State with CGST + SGST breakup
GSTR-3B	❌ Error	Entire tax paid as IGST, due to a drop-down selection mistake
Correction	✅ Done	Correct CGST and SGST paid in next month’s return
Refund Required	✅ Yes	IGST wrongly paid must now be refunded

⚖️ Legal Basis for Refund:

Law	Description
Section 77(1), CGST Act	Refund when CGST/SGST is wrongly paid on inter-State supply
Section 19(1), IGST Act	Refund when IGST is wrongly paid on intra-State supply
Rule 89(1A)	Enables refund for wrong-head tax, time limit: 2 years from correct payment
CBIC Circular 162/18/2021-GST	Clarifies the process for refund in such situations

💻 Step-by-Step Refund Process (When IGST was wrongly paid instead of CGST + SGST)

🪜 Step 1: Login and Navigate

Login to https://www.gst.gov.inGo to: Services → Refunds → Application for Refund

🪜 Step 2: Select Refund Type

Choose: “Refund on account of tax paid under wrong head”

🪜 Step 3: Provide Details

• Month of GSTR-3B with the error

• Invoice details (same ones disclosed in GSTR-1)

• Amount of IGST paid

• Correct CGST + SGST challans

📝 Remarks Example:

“IGST wrongly paid instead of CGST + SGST. Supply was intra-State and disclosed correctly in GSTR-1.”

🪜 Step 4: Upload Documents

• GSTR-1 summary (showing intra-State supply)

• GSTR-3B summary

• Correct payment challans

• Reconciliation statement

• Declaration (no unjust enrichment)

🪜 Step 5: Submit

Submit with DSC or EVCTrack application under “Refunds → Track Application Status”

🪜 Step 6: Refund Order

Refund is sanctioned via Form RFD-06Bank credit is done upon final processing.

📋 Common Scenarios and Refund Eligibility:

Scenario	Tax Paid	Correct Tax	Refund of	Applicable Section
Inter-State wrongly treated as Intra-State	CGST + SGST	IGST	CGST + SGST	Section 77 – CGST Act
Intra-State wrongly treated as Inter-State	IGST	CGST + SGST	IGST	Section 19 – IGST Act

🧠 Practical Challenges & Solutions:

❓ What if Portal Asks for Invoice-wise Details Again?

✅ Solution: Re-enter the same invoice details📝 Add remark: “Invoice already filed correctly in GSTR-1; refund claimed due to GSTR-3B head error.”

❓ Do You Need to Revise the Invoice?

🚫 No. GST law does not require reissuance of invoices in such cases. Just pay the correct tax and claim refund under Section 19 or 77.

📌 Timeline Alert:

• Refund must be filed within 2 years from date of correct tax payment (i.e., CGST + SGST in this case).

• If error occurred before 24.09.2021, the 2-year time starts from that date as per CBIC circular.