Section 76 stops anyone keeping money collected in the name of GST. Whatever was collected as tax must reach the Government, even if the supply turns out not to have been taxable, and the customer who bore it can claim a refund.
Key points
- Under section 76(1) of the CGST Act, 2017 a person who collects any amount as tax must pay it to the Government forthwith, whether or not the supplies were taxable, notwithstanding any order of an appellate authority or court.
- If unpaid, the proper officer issues a notice, hears the person on written request, and orders payment within one year of the notice (excluding any stay), with interest under section 50 from the date of collection.
- The amount paid is adjusted against tax on the supplies; any surplus goes to the Consumer Welfare Fund or is refunded under section 54 to the person who bore the incidence.
The provisions
76(1)–(11)Tax collected but not paid
Statutory text
(1) Notwithstanding anything to the contrary contained in any order or direction of any Appellate Authority or Appellate Tribunal or court or in any other provisions of this Act or the rules made thereunder or any other law for the time being in force, every person who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not.
(2) Where any amount is required to be paid to the Government under sub-section (1), and which has not been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount as specified in the notice, should not be paid by him to the Government and why a penalty equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act.
(3) The proper officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person and thereupon such person shall pay the amount so determined.
(4) The person referred to in sub-section (1) shall in addition to paying the amount referred to in sub-section (1) or sub-section (3) also be liable to pay interest thereon at the rate specified under section 50 from the date such amount was collected by him to the date such amount is paid by him to the Government.
(5) An opportunity of hearing shall be granted where a request is received in writing from the person to whom the notice was issued to show cause.
(6) The proper officer shall issue an order within one year from the date of issue of the notice.
(7) Where the issuance of order is stayed by an order of the court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of one year.
(8) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(9) The amount paid to the Government under sub-section (1) or sub-section (3) shall be adjusted against the tax payable, if any, by the person in relation to the supplies referred to in sub-section (1).
(10) Where any surplus is left after the adjustment under sub-section (9), the amount of such surplus shall either be credited to the Fund or refunded to the person who has borne the incidence of such amount.
(11) The person who has borne the incidence of the amount, may apply for the refund of the same in accordance with the provisions of section 54.
*Enforced w.e.f. 1st July, 2017.
- Rule 142, CGST Rules — Forms GST DRC-01 and DRC-07
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Must GST collected on an exempt supply be paid to the Government?
- Yes. Section 76 of the CGST Act requires any amount collected as tax to be paid over, whether or not the supply was taxable; the customer who bore it may claim a refund.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The section applies to "every person", registered or not, and overrides any contrary order. It complements section 32, which bars unauthorised collection of tax. Penalty for collecting tax and not paying it within three months is in section 122(1)(v), and collecting tax and failing to pay it over beyond three months is an offence under section 132(1)(d).