2022 (3) TMI 1484 - HC - GST

Validity of SCN - seeking direction to the respondents for adjustment of the Integrated Goods and Services Tax (IGST) paid by the petitioner towards Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) in the State of Telangana - HELD THAT - Calling upon the respondents to adjust IGST paid by the petitioner with CGST and SGST would amount to adopting a procedure, which is not provided under the relevant statute. It would be going beyond the statute. Reliance placed in the case of SAJI S., PROPRIETOR, ADITHYA AND AMBADI TRADERS, RANJITH R., PROPRIETOR, RANJITH ROADLINES VERSUS THE COMMISSIONER, STATE GST, THE ASSISTANT STATE TAX OFFICER 2018 (11) TMI 954 - KERALA HIGH COURT where it was held that Where the amount of refund is completely adjusted against any outstanding demand under the Act, an order giving details of the adjustment is to be issued in Part A of FORM GST RFD-07 - the view expressed by the learned Single Judge of Kerala High Court in Saji S. Proprietor cannot be agreed upon. That was a case where petitioner had erroneously paid CGST instead of IGST. The petitioner should comply with the show cause notice dated 23.01.2021 and pay the CGST and SGST amount in terms of the said show cause notice within a period of two months from today - petitioner would be at liberty to file appropriate application under Section 19(1) of the IGST Act for refund of the IGST amount erroneously paid by it - petition disposed off.

Summary

Issues:
1. Quashing of show cause notice dated 23.01.2021
2. Adjustment of Integrated Goods and Services Tax (IGST) paid towards Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) in Telangana

Analysis:
Issue 1: The petitioner sought the quashing of a show cause notice dated 23.01.2021, issued by respondent No.5. The petitioner contended that due to inadvertence in its IT system, it erroneously paid IGST instead of CGST and SGST for transactions within Telangana, causing substantial revenue loss. The respondents argued that the petitioner should seek a refund of the IGST paid, as per the provisions of the IGST Act and Refund Rules. They emphasized that adjusting IGST with CGST and SGST was not provided for in the statutes.

Issue 2: The Court referred to relevant sections of the CGST Act and IGST Act regarding the refund of taxes paid erroneously. It noted that adjustment of IGST with CGST and SGST was not a prescribed procedure. The Court cited a decision of the Jharkhand High Court where a petitioner was directed to pay the correct tax amount and was entitled to a refund for the erroneous payment. Ultimately, the Court directed the petitioner to pay the CGST and SGST amount as per the show cause notice and allowed the petitioner to apply for a refund of the IGST amount paid mistakenly. The Court instructed the authorities to process the refund application promptly.

In conclusion, the Court dismissed the writ petition, directing the petitioner to pay the correct taxes and apply for a refund of the erroneously paid IGST amount. The judgment highlighted the importance of adhering to statutory procedures for tax payments and refunds, emphasizing compliance with tax laws to prevent revenue losses and ensure proper tax administration.