Refund of penalties in GST

Refund of penalties in GST:

There may be some cases when the penalties are deposited in excess by taxpayers. Whether the refund of penalties in GST deposited wrongly will be available. Let us go through the enabling provision of GST for a refund. 

Section 54(8) provides for the refund in GST. It mentions the 6 instances when penalty can be paid to the applicant.

(a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies;

(b) refund of unutilized input tax credit under sub-section (3);

(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;

(d) refund of tax in pursuance of section 77;

(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or

(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify.

If you will notice in every case refund of input tax credit or tax and interest paid is made eligible for a refund. Not even a single instance mentioning about the refund of penalty even if it is wrongly.

Although proviso to section 54(1) provide that

“Provided that a registered person, claiming a refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed. “

Cash ledger will have the amount of penalty if it is wrongly paid. It will be left in cash ledger after adjustment.

May we have some hope of getting a refund of penalty now?

Let us have a look on section 54(9) provide:

“Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8).”

After reading this provision all hope for a refund of wrongly paid penalty should vanish. We can say that taxpayer should pay extra care and attention while depositing the penalty in GST. A wrong payment will make him bear the loss. 

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