A big relief to GST assesses particularly for the dealers, as Kerala High Court has recently announced that the petitioners now can make changes if the GST mistakenly paid under the wrong head.
It’s not a difficult task for the tax authorities to permit the request of petitioner’s and get the amount transferred from one head to another head for example “I-GST” to “S-GST”, High Court said.
It has been observed by a High Court while solving a case of Saji S of Adithya and Ambadi Traders, Ranjith R of Ranjith Roadlines, and the State GST authorities. The decision has been taken by the High Court and it has decided a precedent for similar cases or matters.
Let’s clear with an example if the said dealer had purchased goods from Chennai and transferred them to Kerala and in case, in the midway, their goods were impounded and tax officials demanded penalty and tax. The dealer made the payment under the head of ‘State Goods and Services Tax’ (S-GST) which became a legal case.
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As per the instructions of the Assistant State Tax Officer (ASTO), the petitioner made the payment while transporting goods from Chennai to Kerala. But, as per the law, the dealer is liable to make the payment under the head of ‘Integrated Goods and Services Tax’ (I-GST).
The payment has been done mistakenly on the consignor’ side, so now it is the responsibility of tax authorities to transfer the payment from one head to another head i.e., S-GST to I-GST said, petitioner.
The tax authorities are saying that the petitioner has to pay dues under Integrated Goods and Services Tax (I-GST) and then claim for refund under ‘State Goods and Services Tax’ (S-GST).
The court reviewed that there was nil dispute while paying the taxes and the penalty but had been remitted under the head S-GST, instead of I-GST. The court referred to Section 77 of the GST Tax and Rule 4(1).
Section 77 is assigned for the refund of tax wrongly paid under one head. However, Rule 4(1) provides for an adjustment.
It is assumed that the new decision could provide a big relief to tax assesses. GST is a new tax reform and several taxpayers have been facing issues in respect of making wrong payment.
The tax authorities should release the goods and vehicles that were confiscated while the transition of goods from one place to another and make sure that the tax and penalty paid under S-GST is transfer to the I-GST.
Harpreet Singh, Partner at KPMG, stated that the decision that has been announced by the Court could help to reduce the complexity, “While the court has allowed the cross adjustment of tax under different heads, it would be interesting to see whether the ruling passes the muster of the legal challenge, as the order relies upon subordinate legislation, that is, the Rules over the Act,” said Singh.
