Question ID : 44649

RECOVERING GST PAID AT HIGHER RATE

Dear Experts REG : RECOVERING GST PAID AT HIGHER RATE pl. share your valuable views and guidance Buyer - B was charged GST at 12% by Seller- S by mistake, while later on it is found that actually this product is with NIL rate of tax B paid off invoice and claimed ITC credit and S paid off GST collected to govt, now during GST audit of B - GST officer found ITC credit wrongly availed as there is NIL rate of tax and asked B to pay off GST for availing ineligible ITC credit of purchase of nil rated product and B has paid of the same demanded by govt now B trying to recover wrong charged GST from S, S is not willing to issue credit note, informing that matter is very old of FY 18-19 and they can not get back amount paid to govt under this circumstance can B apply for refund from Govt as he has paid undue tax as neither seller is liable to pay nor buyer is liable to pay any GST on nil rated product under "undue enrichment" to be refunded back to the payer/suffer, here to Buyer B

Answer ID : 85415

In my humble opinion, the amount paid by 'Buyer' to 'Seller' is not a 'tax' at all, when the underlying supply is exempted from GST.In the instant case, the Government has enriched at the suffering of the Buyer. As the Buyer has rightfully reversed the ITC of GST paid and the supplier is not legally allowed to issue the GST credit note (as the time limit to issue the same for the FY 18-19 is expired), the burden of tax has been borne by the Buyer, where he was not supposed to bear the same. Thereby, based on the principle of 'Unjust Enrichment' laid down by the Hon'be Supreme Court in the case of Mafatlal Industries, the Buyer can make an aplication for the refund of the same. Further, reliance can also be placed on Article 265 which provides for 'No tax shall be levied or collected, except by the authority of law', to get relief.

Answer ID : 85421

Thanks Sreenivasulu ji for your valuable views for benefit of all, there is similar recent decision by karnataka high court allowing buyer to claim refund from GOVT "REFUND OF GST PAID ON ADVANCE, WHEN ENTIRE CONTRACT IS CANCELLED" Title: Nam Estates Pvt. Ltd. vs Joint Commissioner Commercial Taxes (Appeals-I), Bengaluru Court: Karnataka High Court Citation: WRIT PETITION NO. 9075 OF 2024 (T-RES) Neutral Citation: 2024:KHC:15476 Dated: 18-Apr-2024 this order downloadable from https://karnatakajudiciary.kar.nic.in/hckweb/citationdetails.php

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