The Central Board of Indirect Taxes and Customs (CBIC) clarified the amount of CGST, SGST or IGST wrongly paid for intra-State or inter-State shall be refunded within 2 years.
The Board has received representations seeking clarification on the issues in respect of a refund of tax wrongly paid as specified in section 77(1) of the Central Goods and Services Tax Act, 2017 and section 19(1) of the Integrated Goods and Services Tax Act, 2017. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in the exercise of its powers conferred by section 168 (1) of the CGST Act, clarified the issues in detail.
It has been clarified that the term “subsequently held” in section 77 of CGST Act, 2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-State or intra-State supply made by a taxpayer, is either subsequently found by the taxpayer himself as intra-State or inter-State respectively or where the inter-State or intra-State supply made by a taxpayer is subsequently found/ held as intra-State or inter-State respectively by the tax officer in any proceeding. Accordingly, refund claims under the said sections can be claimed by the taxpayer in both the above-mentioned situations, provided the taxpayer pays the required amount of tax in the correct head.
The refund under section 77 of CGST Act/ Section 19 of IGST Act, 2017 can be claimed before the expiry of two years from the date of payment of tax under the correct head, i.e. integrated tax paid in respect of subsequently held inter-State supply, or central and state tax in respect of subsequently held intra-State supply, as the case may be. However, in cases, where the taxpayer has made the payment in the correct head before the date of issuance of notification No.35/2021-Central Tax dated 24.09.2021, the refund application under section 77 of the CGST Act/ section 19 of the IGST Act can be filed before the expiry of two years from the date of issuance of the said notification. i.e. from 24.09.2021.
Rule 89 (1A) of the CGST Rules would be applicable for section 19 of the IGST Act also, where the taxpayer has initially paid IGST on a specific transaction which later on is held as intra-State supply and the taxpayer accordingly pays CGST and SGST on the said transaction. It is also clarified that any refund applications filed, whether pending or disposed of off, before issuance of notification No.35/2021-Central Tax, dated 24.09.2021, would also be dealt with in accordance with the provisions of rule 89 (1A) of the CGST Rules, 2017.
Refund under section 77 of the CGST Act/section 19 of the IGST Act would not be available where the taxpayer has made tax adjustment through the issuance of credit note under section 34 of the CGST Act in respect of the said transaction.
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