Ocean E Mart Vs State of U.P
Date: January 11, 2026
Subject Matter
Tax Paid under Wrong GST Head Must Be Adjusted by Authorities
Summary
The petition was allowed, and the order imposing liability for non-payment of IGST was set aside. The High Court directed the authorities to consider tax mistakenly deposited under CGST and SGST as valid payment towards IGST, ensuring a just assessment and potential refund.
Summary of Facts and Dispute:
- Impugned Action: The Deputy Commissioner, State Tax, passed an order dated 27.01.2024 (ARN No. ZD090124229832F) under Section 73 read with Section 161 of the GST Act for the assessment year 2018-2019, imposing liability on the petitioner for non-payment of IGST.
- Petitioner's Argument: The petitioner mistakenly deposited tax amounting to Rs. 1,41,63,327.46/- under the heads of CGST and SGST instead of IGST. This fact was brought to the authority's knowledge under Section 73(3). The petitioner contends that if the CGST and SGST payments are accounted for, they have overpaid and are eligible for a refund.
- Core Question of Law: Whether the authorities are obliged to account for tax mistakenly deposited under CGST and SGST heads against the IGST liability, and whether non-payment under the correct head, despite genuine payment under an incorrect head, warrants a demand under Section 73.
Key Legal Issues & Findings:
Consideration of Tax Payments Made Under Incorrect Heads
The Court, relying on the precedent set by the Kerala High Court in Saji S, Proprietor and others vs. The Commissioner, State GST Department and another, held that tax deposited under incorrect heads must be considered for adjustment.
- Mistaken Deposit: The Court acknowledged that the petitioner had genuinely paid taxes but mistakenly deposited them under CGST and SGST instead of IGST.
- Substantive Justice: Despite the respondent's submission regarding the absence of a specific mechanism for transferring funds between tax heads, the Court prioritized ensuring that tax genuinely paid by the petitioner is duly accounted for.
- Recourse for Refund: The Court emphasized the importance of considering the actual payments and directed that any excess payment resulting from this adjustment should be refunded as per Section 77 of the GST Act.
Ruling:
- Outcome: The impugned order dated 27.01.2024 passed by the Deputy Commissioner, State Tax, is quashed and set aside.
- Directions: The authorities are directed to consider the matter afresh, specifically taking into account the tax deposited under SGST and CGST as valid payment towards the IGST head. If any refund is found due to the petitioner, the same shall be paid immediately as per Section 77 of the GST Act.
- Liberty: The Revenue is at liberty to conduct a fresh assessment to determine the accurate IGST liability and process any due refund to the petitioner based on the adjusted payments.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel appearing on behalf of the parties.
2. This is a writ petition under Article 226 of the Constitution of India, wherein the writ petitioner has sought for the following substantial reliefs:-
“(i.) Issue a Writ, Order or Direction in the nature of Certiorari thereby setting aside the order dated 27.01.2024 passed by the Deputy Commissioner, State Tax, Lucknow Sector -22, Distt.-Lucknow i.e. the respondent No. 02 in ARN No. ZD090124229832F under section 73 read with section 161 of GST Act for the assessment year 2018-2019, in the interest of Justice. (Annexure No. 01).
(ii.) Issue a Writ, Order or Direction in the nature of Mandamus directing thereby the respondent No. 02 to settle the dispute by depositing the amount in the head of IGST and refund the access payment along with the interest of Rs. 18% compounding as the petitioner’s firm had deposited total tax amount of Rs. 1,41,63,327.46/- in terms of CGST and SGST.”
3. Learned counsel appearing on behalf of the petitioner submits that mistakenly the tax that was to be deposited as IGST, had been deposited by the petitioner under the head of CGST and SGST. He submits that he had brought this fact before the knowledge of the original authority under Section 73 (3) of GST Act. However, the authorities did not take this into account and imposed liability on the petitioner for non-payment of tax under the head of IGST. In fact, the petitioner submits that if the CGST and SGST payments are taken into account, he has paid over and above the payments made under the IGST. He further submits that he is actually liable to get refund of the money.
4. Learned counsel for the petitioner relies upon the judgment of Kerala High Court in the case of Saji S, Proprietor and others vs. The Commissioner, State GST Department and another, (WP (C) No.35868 of 2018, decided on 12.11.2018) and places reliance on paragraphs no.7, 9 and 10.
5. Learned counsel appearing on behalf of the respondents has submitted that there is no mechanism by which the tax deposited as SGST and CGST can be transferred to the head of the IGST. He, however, fairly submits that it appears that the petitioner has paid taxes but in the wrong head.
6. In light of the same, the impugned orders are quashed and set aside with a direction upon the authorities to consider the matter afresh taking into account the tax deposited in SGST and CGST into the head of IGST. Needless to mention if any refund is due to the petitioner, the same shall be paid immediately as per Section 77 of the GST Act.
7. With the above direction, the writ petition is disposed of.