Tax wrongfully collected and paid to Central Government or State Government.

Section 77(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.

AI Explanation

In some cases, a person registered under tax regulations may pay both Central tax and State tax, or Central tax and Union territory tax, for what they believe is an intra-State supply. However, if it turns out that the transaction is actually an inter-State supply, the registered person is entitled to a refund of the taxes paid. The process and conditions for this refund will be determined and specified.

Section 77(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.

AI Explanation

Similarly, if a registered person pays integrated tax for what they consider to be an inter-State supply, but later it is revealed to be an intra-State supply, they will not be required to pay any interest on the amount of Central tax and State tax, or Central tax and Union territory tax that was originally due. This provision aims to ensure fairness in tax payments and prevent unnecessary financial burdens on businesses.