Chapter VI - Demands and recovery
Section 12
Section 12: Tax wrongfully collected under the wrong tax head
Section 12 deals with a supply that was treated as intra-State or inter-State and was later held to fall under the other category. It provides a refund route for wrongly paid CGST and UTGST, and interest relief in the reverse case.
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Need advice on Section 12?
This article is for general information. Refer to the Union Territory 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 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 the central tax and the Union territory tax payable.
Key takeaways
Intra-State becomes inter-State
A registered person who paid CGST and UTGST on a supply later held inter-State is entitled to refund of those taxes in the prescribed manner and subject to prescribed conditions.
Inter-State becomes intra-State
If IGST was paid and the supply is later held intra-State, Section 12(2) removes interest on the CGST and UTGST now payable.
Classification comes first
Keep the legal finding and place-of-supply basis that changed the classification before making corrective filings.
Intra-State becomes inter-State
A registered person who paid CGST and UTGST on a supply later held inter-State is entitled to refund of those taxes in the prescribed manner and subject to prescribed conditions.
Inter-State becomes intra-State
If IGST was paid and the supply is later held intra-State, Section 12(2) removes interest on the CGST and UTGST now payable.
Classification comes first
Keep the legal finding and place-of-supply basis that changed the classification before making corrective filings.
Practical checklist
Do
- Retain the original invoice, tax payment and order or determination changing the supply classification.
- Pay the correct tax head and seek the wrong-head refund through the current prescribed procedure.
- Reconcile the corresponding IGST Act Section 19 treatment and avoid assuming an automatic ledger transfer.
Frequently asked questions
Does Section 12 waive the principal tax due under the correct head?
No. It addresses refund of the wrongly paid head or interest relief on the corrected CGST and UTGST liability; the correct principal tax remains payable.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026