Bombay HC says Tax Paid Under the Wrong Head Must Be Transferred Before Further Recovery

The Bombay High Court held that where the taxpayer had already discharged GST of ₹7.65 crore under the CGST and SGST heads, the Department could not invoke Section 74 merely because the tax was paid under the wrong heads instead of IGST. Having regard to Sections 77 of the CGST Act and 19 of the IGST Act, read with Rule 4 of the Refund Rules, the Court held that the amount could be transferred internally to the IGST head. The Court set aside the demand and directed the Department to effect the transfer upon the taxpayer furnishing proof of payment. Importantly, the Court did not determine the correct quantum of IGST payable or foreclose recovery of any amount exceeding the sum already paid.