Facts of the Case:

The petitioner inadvertently reported the entire GST liability of ₹5,84,832.70 under the IGST head in the GSTR-3B return for September 2021 instead of apportioning it equally between CGST and SGST. Consequently, the department demanded payment under the CGST and SGST heads. Although the rectification order acknowledged that the entire tax liability had already been discharged under the wrong head, it directed the petitioner to first pay CGST and SGST afresh and thereafter seek refund of the IGST amount. Aggrieved by this direction, the petitioner approached the High Court.

Issue:

Whether a taxpayer who has already discharged the entire tax liability under an incorrect tax head can be compelled to make a fresh payment under the correct heads before claiming refund of the amount wrongly paid.

Held That:

The Court observed that Section 19 of the IGST Act, 2017, Section 77 of the CGST Act, and Rule 89(1A) of the CGST Rules deal specifically with cases involving misclassification of a supply as inter-State or intra-State and do not apply where tax has merely been paid under an incorrect tax head due to an inadvertent clerical error. Since the department itself had acknowledged in the rectification order that the petitioner had paid the entire tax amount under the IGST head and was entitled to a refund, there was no justification for insisting upon fresh payment under the CGST and SGST heads before granting such refund.

The Court held that compelling the petitioner to first pay the tax again and thereafter seek refund would be unjust and would unnecessarily burden the taxpayer despite there being no loss of revenue. Accordingly, the Court directed the petitioner to file an application seeking appropriation of the amount wrongly paid under the IGST head towards the CGST and SGST liabilities and directed the authorities to complete such appropriation within 30 days of receipt of the application. The rectification order dated 17.02.2026 was set aside to the extent it required the petitioner to first discharge the tax liability afresh before claiming refund.

Case Name:SYA Homes Versus Assistant Commissioner (ST), Vadapalani Assessment Circle, Chennai, The Assistant Commissioner (ST) (FAC), Deputy Commissioner (ST), Commercial Taxes Department, Chennai dated 07.07.2026