2024 (12) TMI 826 - HC - GST

Maintainability of refund application submitted by the petitioner in view of the order of 6th respondent - jurisdiction of 6th respondent to refund the tax deducted by 4th respondent for the proportion of work executed in the State of Maharashtra - HELD THAT - It can be observed that the tax was deducted by the 4th respondent from the bills raised in respect of works carried in both the states. However, the entire deducted tax amount has been remitted to the State of Telangana as a result of which excess amount is lying in the electronic cash ledger of the petitioner. Taking into account the excess amount in ledger, the 1st respondent had rejected the claim for refund of excess tax on the ground that the petitioner is liable to pay huge tax in terms of GST DRC 07 and thereafter, raised additional demand for payment of tax. Since the nature of supply is of the intra-state in respective States, the tax liability shall be discharged individually in each State equivalent to the work executed in respective states. As such the tax liability for the work executed in Telangana shall be payable in Telangana. It is pertinent to note that petitioner JV failed to place on record inter se agreement entered between L T and PES with regard to works allotted and executed by each partner. It is contended that JV is a pass through entity and in fact the project works were executed by the partners of JV independently. Also further contended that partners of JV raises bills in favour of the JV and which in turn raises bills in favour of 4th respondent by taking input credit. Since no material is placed on record with regard to proportion of work executed by each partner of JV independently, it is not possible for this court to determine the proportion of work executed in both States and tax liability thereof. It is contended by the petitioner that tax liability has been discharged independently for the works executed in the State of Maharashtra, however, the petitioner failed to produce any material on record evidencing discharge of tax liability in the State of Maharashtra. As far as the issue of refund for the period October, 2018 to March, 2019 and April, 2019 to July, 2019 is concerned, it is imperative to determine the place of supply of services. As Section 12 (3) of IGST Act is applicable to the present case at hand, the place of supply shall be both the States and the nature of supply is intra-state in proportionate to the value of services rendered or determined in respective States. The common order so passed in the aforesaid two writ petitions shall govern so far as the claim of the petitioner in the present writ petitions are concerned. Therefore, the demand notices dated 13.03.2020 shall be kept in abeyance till the disposal of the refund application in accordance with the order in two writ petitions i.e., W.P.Nos.6271 and 6299 of 2020 - Petition disposed off.

Summary

Issues Involved:

1. Maintainability of the refund application submitted by the petitioner in light of the 6th respondent's order.
2. Jurisdiction of the 6th respondent to refund tax deducted by the 4th respondent for work executed in Maharashtra.

Issue-wise Analysis:

1. Maintainability of the Refund Application:

The petitioner, a joint venture, sought refund of excess TDS deducted by the 4th respondent from the work executed under a construction contract spanning Telangana and Maharashtra. The 6th respondent overturned the 1st respondent's decision, which had rejected the refund claim on the grounds of outstanding tax liability. The 6th respondent recognized that the petitioner was entitled to claim a refund for the tax credit collected from invoices raised by the JV's partners, but only for work executed in Telangana. It was emphasized that the nature of supply was intra-state, requiring separate tax liability discharge in each state based on the work executed there. The petitioner failed to provide evidence of tax discharge for Maharashtra, impacting the refund claim's maintainability.

2. Jurisdiction of the 6th Respondent:

The 6th respondent's jurisdiction was limited to transactions within Telangana, and it was not authorized to adjudicate matters related to Maharashtra. The 6th respondent's decision to apportion the TDS amount between the states was based on the proportion of output tax reported in Telangana. The petitioner was advised to claim the TDS refund for Maharashtra in that state. The court noted that without evidence of the proportion of work executed by each JV partner, it was not feasible to determine the tax liability for Maharashtra. The petitioner was required to address the refund issue in Maharashtra, as the 6th respondent could not extend its jurisdiction beyond Telangana.

Conclusion:

The court concluded that the common order passed in related writ petitions (W.P.Nos.6271 and 6299 of 2020) would govern the current petitions. The demand notices issued were to be kept in abeyance until the refund application was resolved per the common order. The court directed the 1st respondent to decide on the additional demand based on the refund application's outcome. The writ petitions were disposed of with no order as to costs, and any pending miscellaneous applications were closed.