Key Highlights of Circular No. 162/18/2021-GST

2025-03-03 09:28:40 02March

02March

Key Highlights of Circular No. 162/18/2021-GST

<h2>1. Understanding Sections 77 (CGST Act) & 19 (IGST Act)</h2>? Section 77 of CGST Act → If a registered person wrongly paid CGST+SGST on a supply later held to be inter-State (IGST taxable), they can claim a refund of CGST+SGST after paying IGST.? Section 19 of IGST Act → If a registered person wrongly paid IGST on a supply later held to be intra-State (CGST+SGST taxable), they can claim a refund of IGST after paying CGST+SGST.? No Interest Liability → If a taxpayer corrects the tax head before any scrutiny, assessment, audit, or adjudication, no interest is payable on the correct tax head.<hr><h2>2. Meaning of "Subsequently Held"</h2>? "Subsequently held" covers both cases:<ul><li>Self-identification by taxpayer (i.e., taxpayer realizes the mistake and corrects it).</li><li>Determination by tax officers (via scrutiny, audit, or adjudication).</li></ul>? Refunds are applicable in both cases, provided tax is correctly paid under the right head.<hr><h2>3. Time Limit for Filing Refund Claims</h2>? Rule 89(1A) of CGST Rules (introduced via Notification No. 35/2021 - Central Tax, dated 24.09.2021) specifies the time limit for refund claims:✅ If tax is paid under the correct head after 24.09.2021:<ul><li>Refund application must be filed within 2 years from the date of payment under the correct tax head.</li></ul>✅ If tax was paid under the correct head before 24.09.2021:<ul><li>Refund application must be filed within 2 years from 24.09.2021 (i.e., before 23.09.2023).</li></ul><hr><h2>4. Practical Examples of Refund Claim Deadlines</h2><figure class="table"><table><thead><tr><th>Scenario</th><th>Date of Correct Tax Payment</th><th>Last Date for Refund Application</th></tr></thead><tbody><tr><td>Taxpayer realizes mistake & pays IGST</td><td>10.05.2021 (before notification)</td><td>23.09.2023 (2 years from 24.09.2021)</td></tr><tr><td>Taxpayer realizes mistake & pays IGST</td><td>10.11.2021 (after notification)</td><td>09.11.2023 (2 years from tax payment)</td></tr><tr><td>Tax officer determines mistake & IGST is paid</td><td>10.05.2019 (before notification)</td><td>23.09.2023 (2 years from 24.09.2021)</td></tr><tr><td>Tax officer determines mistake & IGST is paid</td><td>10.11.2022 (after notification)</td><td>09.11.2024 (2 years from tax payment)</td></tr></tbody></table></figure>? Same rule applies when IGST is wrongly paid instead of CGST+SGST.<hr><h2>5. Refund Not Allowed If Credit Note Is Issued</h2>? Refund under Section 77 / Section 19 is NOT allowed if:<ul><li>The taxpayer issued a credit note under Section 34 of CGST Act to adjust the tax amount.</li></ul>? Reason: If tax is adjusted through credit note, it is assumed that the taxpayer has already settled the tax adjustment.<hr><h2>6. Trade Notices & Implementation</h2>? CBIC directs tax authorities to issue trade notices ensuring businesses understand these clarifications. ? Any challenges in implementation should be reported to CBIC.<a href="https://cms.plasament.com/storage/shubham-pathak/circular-no-162-18-2021-gst.pdf">Circular-No-162-18-2021-GST</a>