Tax wrongfully collected and paid to Central Government or State Government
Section 77, CGST Act
Straight from CBIC
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Amendment history
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Section 77 provides relief where tax was paid under the WRONG head – a supply treated as intra-State but held to be inter-State (or vice-versa): the wrongly paid tax is refunded and no interest is charged on the correct tax subsequently paid.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Read with section 19 of the IGST Act – between them they cover both directions of the wrong-head error.
No interest is payable on the correct tax paid later, and the wrongly paid tax is refunded; Rule 89(1A) allows the refund application within two years of the date of payment of the CORRECT tax.
This is the answer to most place-of-supply reclassifications – the exposure is cash-flow, not interest and penalty, provided the error was genuine.
Questions people actually ask
Real questions we get on this provision, answered straight.
We charged CGST and SGST on what the department says was an inter-State supply.+
Pay the IGST and claim refund of the CGST and SGST under section 77 read with Rule 89(1A) – within two years of paying the IGST. No interest is chargeable on the IGST because of section 77(2), which is the point to put in the reply.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
804 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
Read the full provision+
(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.
High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2017-07-01 · Commenced
Provision as originally enacted in the CGST Act, 2017 (Act 12 of 2017) and brought into force w.e.f. 01-07-2017.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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