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Sreeram Viswanath

Expert

Published on: Jul 30, 2026

GST Payment Errors

"To err is human". In the hassles of modern day life, even the most experienced of professionals or taxpayers can make mistakes. What kind of mistakes are pardoned, and what will be dealt with by fine or penalties? The purpose of this article is to highlight the GST payment errors, and to find solutions for the same.

Payment Errors

To make it clear, Inter-State supply is the act of supplying from one state to another, whereas intra-state supply is the supply within the boundaries of a state. Intra-State transactions enfold under the wings of CGST and SGST/UGST, whereas Inter-State transaction comes under IGST.

(More about inter-state vs intra-state supply) In a situation where the taxpayer wrongly credited his taxes considering it as an intra-state supply but later found the taxes belongs to an inter-state one, the taxpayer should pay IGST. The GST department shall refund the amount paid by mistake. In a situation where the taxpayer has wrongly credited his taxes considering it as an inter-state supply but later found it to be an intra-state one, he will be reprieved of paying  any interest while paying Central Tax or State Tax, as the case may be. Click here to read on Bond for Release of Seized Goods under GST

Incorrect GST Collection from Customers

The laws of GST may be somewhat lenient , but not fragile enough to permit evasion. If a person who collects the tax fails to deposit the same, the taxpayer will be penalized. The individual who collected GST even for exempted goods must deposit it to the Government. The defaulter may also request for a hearing, if he feels the necessity to do so. In this kind of a scenario, the concerned officer will issue an order to the defaulter prompting payment of taxes, along with the penalties. The order needs to be issued within a year from the date of issue of the show-cause notice.

Recovery by Tax Officials

The defaulter must pay the necessary dues as prescribed, within a period of three months from the date of order. If it isn't done so, the concerned officer may initiate the following proceedings of recovery:

  • The proper officer may act for reduction or nullification of any amount so payable to the defaulter;
  • The proper officer will sell any goods belonging to the defaulter if it is under his control, or for that matter under the control of other officers;
  • The proper officer may issue a notice to anyone, who owes the defaulter any amount which is equal to or lesser than the amount liable, to make a payment to the government in a stipulated time, subject to certain conditions;
  • The officer may extend the duration of the notice if requested by the defaulter;
  • The officer may detain any properties of the defaulter, and hold it until processing the necessary payments. The concerned officer may confiscate the same after a period of 30 days in order to sell it and thereby satisfy the cause;
  • The officer may prepare a certificate duly signed by him and send it to the collector or other government authorities as prescribed so that these authorities can act on recovering the money considering it to be an "arrear of land revenue".

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GST recovery proceedings.
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Frequently Asked Questions

Common questions about GST Payment Errors and Solutions.

Intra-state supply refers to the supply of goods or services within the boundaries of a single state, which is subject to CGST (Central GST) and SGST/UTGST (State/Union Territory GST). Inter-state supply, on the other hand, involves the movement of goods or services from one state to another, which is subject to IGST (Integrated GST).
If a taxpayer wrongly credited taxes considering it an intra-state supply but later found it to be an inter-state supply, they should pay IGST. The GST department will refund the amount paid by mistake as CGST and SGST/UTGST.
If a taxpayer has wrongly credited taxes considering it an inter-state supply but later found it to be an intra-state supply, they will not be charged interest while paying the correct Central Tax or State Tax, as applicable.
No, collecting GST on exempted goods is not permitted. If a taxpayer collects GST even for exempted goods, they must deposit it to the government.
If a taxpayer collects GST but fails to deposit it with the government, they will be penalized. The concerned officer will issue an order to the defaulter, prompting them to pay the taxes along with penalties within a specified timeframe.
A defaulter must pay the necessary dues as prescribed within three months from the date of the recovery order issued by the concerned officer.
Yes, a defaulter may request a hearing if they feel the need to do so. The concerned officer will issue an order to the defaulter after considering their case.
The concerned officer must issue the recovery order within one year from the date of issuing the show-cause notice to the defaulter.
Yes, the tax officials have the authority to detain any properties of the defaulter and hold them until the necessary payments are processed. If the dues are not cleared within 30 days, the officials can confiscate and sell the properties to satisfy the recovery.