Patna High Court has recently given a ruling that if a taxpayer has mistakenly deposited GST under the wrong head (e.g. IGST instead of SGST/CGST), then the refund limitation period will be considered from the date when the taxpayer has deposited the tax in the correct head.
What was the matter?
For the financial year 2017-18, a taxpayer had deposited all the taxes by filing his GSTR-01, GSTR-3B and GSTR-09 returns. But during the audit, the department found that the taxpayer had wrongly deposited tax by showing some transactions as intra-state (CGST/SGST), whereas they were actually inter-state transactions (IGST).
The taxpayer later deposited the tax in the correct head and applied for refund. The department also admitted that the taxpayer has a right to a refund, but rejected the application on the basis of limitation period.
Department’s argument and court’s decision
The department said that the tax was deposited in January 2018, while the refund application was made in January 2024, i.e. about 4 years late. But the High Court bench (Justice Rajiv Ranjan Prasad and Shailendra Singh) said that the department had made a mistake.
The court clarified that the limitation period will be counted from the date when the taxpayer deposited the tax in the correct head, and not from the time when the tax was paid by mistake.
Taxpayer will get refund and interest
The High Court said that the taxpayer is entitled to get a refund and will also get 6% annual interest on the amount deposited under SGST and CGST. This interest will be calculated from three months after the date of filing the refund application and will be available till the date of actual payment.
Government’s preparation towards GST reform
Recently, the central government announced plans to go for a major change in the GST structure. Now a plan is being considered to keep only two tax slabs for goods – 5% and 18%. Currently, many slabs are applicable on different goods and services, which makes the tax structure complex. If this change is implemented, the GST system will become very simple and transparent.