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2021 (2) TMI 769 - HC - GSTSeeking direction to respondent for reimbursement of GST at 12% on the value of construction work done under the agreement entered into with the 5th respondent - seeking direction to respondents not to deduct VAT amount and 1% of CGST and SGST while releasing the final bill in relation to the agreement - seeking direction to refund of the VAT amount deducted to the petitioner along with 18% interest from the due date till the date of payment along with exemplary costs - HELD THAT - The action of the 7th and 8th respondents in not granting refund to the 5th respondent on the pretext that application for refund was filed beyond the period specified under the TVAT Act cannot be countenanced, and the respondent ought to have granted refund of the amount being the amount collected without authority of law. This Court is of the considered view that there are no bonafides or justification on part of the 1st to 6th respondents in seeking to adjust a sum of ₹ 11,93,172/- from the GST payable to the petitioner at the rate of 12% in respect of the work executed under the agreement dated 05.08.2017 and also seeking to deduct TDS at the rate of 1% under GST - Similarly, the action of 7th and 8th respondents in not refunding the amount remitted by the 5th respondent as VAT liability for the work executed, post-introduction of GST, on the ground of the refund application having been filed beyond the period specified under the Act, also cannot be held to be valid. Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Reimbursement of GST at 12% on the value of construction work. 2. Deduction of VAT amount of ?11,93,172/- and 1% CGST and SGST from the final bill. 3. Refund of the VAT amount deducted along with 18% interest. 4. Validity of the actions of the respondents in deducting VAT and not reimbursing GST. 5. Processing of refund application by the 7th and 8th respondents. Issue-Wise Detailed Analysis: 1. Reimbursement of GST at 12% on the value of construction work: The petitioner sought a directive to the respondents to reimburse GST at 12% on the value of the construction work done under an agreement dated 05.08.2017. The court acknowledged that the work executed by the petitioner was after the introduction of GST and after the repeal of the Telangana VAT Act, 2005. Therefore, the petitioner was not liable to pay VAT/TOT at the rate of 5% on the contract executed. The court directed the respondents to reimburse GST at 12% on the value of the work executed under the agreement. 2. Deduction of VAT amount of ?11,93,172/- and 1% CGST and SGST from the final bill: The petitioner contended that despite the repeal of the VAT Act, the 5th respondent added VAT at the rate of 5% to the running bills and deducted such VAT, remitting it to the 8th respondent. The court found this action illegal and arbitrary, as the VAT Act had been repealed and GST was applicable. The court directed the respondents not to adjust/deduct the VAT amount of ?11,93,172/- and also the CGST and SGST of 1% from the final bill. 3. Refund of the VAT amount deducted along with 18% interest: The petitioner sought a refund of the VAT amount deducted along with 18% interest from the due date till the date of payment. The court noted that the amount received by the 7th and 8th respondents was without any authority of law and in contravention of Article 265 of the Constitution of India. The court directed the 7th and 8th respondents to process the refund application filed by the 5th respondent for the amount of VAT paid mistakenly. 4. Validity of the actions of the respondents in deducting VAT and not reimbursing GST: The respondents justified their actions by citing initial hiccups in the implementation of GST and lack of clarity regarding the applicable rate of GST. The court found this justification unacceptable, as the respondents continued to add and deduct VAT despite the repeal of the VAT Act. The court held that the respondents' actions were without bonafides or justification and directed them to reimburse the petitioner without adjusting/deducting the VAT amount. 5. Processing of refund application by the 7th and 8th respondents: The 7th and 8th respondents claimed that the refund application could not be processed as it was filed beyond the period prescribed under the VAT Act. The court rejected this claim, stating that the amount collected as VAT was without authority of law. The court directed the 7th and 8th respondents to process the refund application within three weeks without insisting on any further application from the 5th respondent. Conclusion: The court allowed the writ petition, directing the respondents to reimburse GST at 12% on the value of the work executed and not to deduct the VAT amount or CGST and SGST from the final bill. The court also directed the 7th and 8th respondents to process the refund application for the VAT amount mistakenly paid. The final bill was to be released within two weeks, failing which interest at the rate of 8% per annum would be payable.
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