Tax paid in DRC-03 under wrong minor head, Goods and Services Tax - GST

[SS Sharma]

The registered person was issued a DRC-07 order against a wrongful ITC claim. The person paid the tax demanded (without the interest and penalty component) as a voluntary payment with DRC-03. The payment was made under the right act (IGST) but the wrong minor head, ie.. it was paid to the Others head instead of to the Tax head. Hence the system doesnt allow the DRC-03 to be set off against the Demand in DRC-03A.

We tried requesting a refund of the amount paid under the wrong head so that we may pay it again under the right head but this was denied as the original DRC-07 order still shows as outstanding as the DRC-03 payment is not yet linked to the DRC-07.

The person wants to apply for waiver of interest and penalty under 128A. Can we apply for the same with the above mentioned DRC-03 challan even if the original demand is still marked as unpaid?

Any input from the experts is welcome.

Posts / Replies

[ROHIT GOEL]

Dear Sir

It is suggested in this case to first file the DRC-03 with correct minor head so that waiver application can be filed under section 128A. Thereafter, apply for a refund of the DRC-03 filed with wrong minor head details. 

[SS Sharma]

Dear Sir,

The refund application would be processed only if the entire demand made in DRC-07 is fully extinguished including the tax, interest and penalty components. So if we pay the tax component again under proper heads and set it off against the demand, the interest and penalty component would still be an open liability. So we wouldn't be able to claim the refund for the first payment unless the application under 128A gets adjudicated and a closure order is received. This would not be very practical as it would involve blocking a substantial amount of money for a long time.