IGST Paid Under a Wrong Head to be Adjusted Against CGST/SGST Liability Before Any Recovery of Tax Interest or Penalty

Last updated: 22 August 2026

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The Karnataka High Court has ruled that if a business mistakenly pays IGST on supplies that are actually intra-state, this tax can be adjusted against the correct CGST/SGST liability. The court quashed previous orders demanding extra tax, interest, and penalties, stating that Section 77(2) of the CGST Act allows for this adjustment. The matter was sent back for a fresh order, ensuring taxpayers aren't penalised for such errors.

Court :
Karnataka High Court

Brief :
The Hon’ble Karnataka High Court in M/s. GR Tech Services Pvt. Ltd. v. Assistant Commissioner of Commercial Taxes (Audit) & Ors. [Writ Petition No. 15670 of 2026 (T-RES) dated June 03, 2026] allowed the writ petition in part, thereby quashing the Adjudication Order, the Order-in-Appeal, and the consequential demand issued in Form GST DRC-13, and held that where an assessee has inadvertently discharged IGST on supplies which were subsequently held to be intra-State supplies, the tax paid under the wrong head ought to be adjusted against the liability arising under the correct head in terms of Section 77(2) of the Central Goods and Services Tax Act, 2017 ( “the CGST Act” ) read with Rule 92 of the Central Goods and Services Tax Rules, 2017 ( “the CGST Rules” ), and the assessee cannot be fastened with the liability to pay either tax or interest or penalty. Accordingly, the matter was remanded back to the original authority for passing a fresh order.

Citation :
Writ Petition No. 15670 of 2026 (T-RES) dated June 03, 2026

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Attached File : 671907_6097_13_gr_tech_services_pvt_ltd.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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