Chapter XV - Demands and recovery
Section 77
Section 77: Tax wrongfully collected and paid to Central or State Government
Section 77 deals with correction when a supply initially treated as intra-State or inter-State is later held to be the opposite.
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Need advice on Section 77?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) A registered person who has paid the Central tax and State tax or, as the case may be, the central tax and the Union territory tax on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay any interest on the amount of central tax and State tax or, as the case may be, the Central tax and the Union territory tax payable.
Introduction
A place-of-supply classification correction may shift tax between CGST/SGST or UTGST and IGST. Section 77 addresses the wrongly paid component and an interest protection.
Key takeaways
Intra-State later held inter-State
A person who paid central plus State or Union territory tax on a transaction later held inter-State is refunded those amounts in the prescribed manner and subject to conditions.
Inter-State later held intra-State
Where integrated tax was paid and the supply later is held intra-State, interest is not required on the central and State or Union territory tax that becomes payable.
Record trail
Retain the original tax payment, the later determination and the corrected tax payment or refund claim.
Intra-State later held inter-State
A person who paid central plus State or Union territory tax on a transaction later held inter-State is refunded those amounts in the prescribed manner and subject to conditions.
Inter-State later held intra-State
Where integrated tax was paid and the supply later is held intra-State, interest is not required on the central and State or Union territory tax that becomes payable.
Record trail
Retain the original tax payment, the later determination and the corrected tax payment or refund claim.
Practical checklist
Do
- Document the original and corrected place-of-supply position.
- Reconcile the tax heads paid and now payable.
- Use the prescribed refund procedure and retain the order.
Avoid
- Apply the pre-FY 2024-25 demand route to a later financial year.
Frequently asked questions
Is interest due on CGST and SGST after an IGST-paid supply is held intra-State?
Section 77(2) says no interest is required on those newly payable taxes in that situation.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026