9911796707
TMI Blog2024 (11) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... cally the constituent of the petitioner would raise bills on the petitioner for the portion of the work executed by it each month. In turn, the petitioner would raise a single consolidated invoice on the employer (MMRDA). On availing of these advances, the petitioner issued advance receipt vouchers to the MMRDA for both the first and second installment of the mobilization advance received by it. Such advance receipt vouchers as issued/ executed by the petitioner in favour of the MMRDA, indicated several details inter alia the total amount of advance claimed before tax and the GST amounts payable on such advance and the total invoice value. In State of M. P. Vs. Rakesh Kohli Anr. [ 2012 (5) TMI 262 - SUPREME COURT ], the Court was considering the challenge whether the High Court was justified in declaring Clause (d) of Article 45 of Schedule 1-A of the Indian Stamp Act, 1899 which was brought in by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 as unconstitutional being violative of Article 14 of the Constitution of India. In such context, the Supreme Court, not agreeing with the view taken by the High Court, held that the well defined limitation in the constitutional validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once the actual supply itself is not made, there is no warrant for the levy in question either by virtue of the applicability of Section 7 read with Section 9 and Sections 12 and 13. The petitioner merely referring to the provisions of Article 246A read with Article 366 (12A) of the Constitution which provide that the Parliament as also the State Legislature would be empowered to make laws in respect of goods and services tax to be imposed by the Union or a State, would be required to be interpreted in a broad sense. Thus, the Parliament as also the State Legislature were within their constitutional authority, to not only enact the provisions which are assailed by the petitioner, but also to prescribe / stipulate the manner and the method under which the scheme of the GST laws ought to work, in regard to the applicability of such provisions, was also the domain of the respective legislatures. In the present case as contended on behalf of the petitioner, the provisions of Section 31 read with Rule 36 are being applied by the Revenue to deny the input tax credit to the petitioner on the ground that on account of lack of supply, no invoice was available or issued so as to entitle the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and Conclusion. 76 - 127 1. Rule, made returnable forthwith. Respondents waive service. By consent of the parties, heard finally. A. Introduction :- 2. The petitioner a consortium of two entities was awarded a contract by the Mumbai Metropolitan Development Authority (MMRDA) a project of public importance, namely the Mumbai Trans Harbour Link Project , which involved construction of the longest bridge of 22 kms on the ocean connecting South Mumbai and Nhava-Sheva in Navi Mumbai. It is under such contract disputes have arisen on the application of the provisions of the Central Goods and Services Tax Act, 2017 (for short CGST Act ) as also the corresponding provisions of the Maharashtra Goods and Services Tax Act, 2017(for short MGST Act ) inter alia in regard to the petitioner s claim in regard to the input tax credit being not granted to the petitioner qua the advance amounts received by the petitioner from the MMRDA as per the terms of the contract and remitted to its constituent L T as also denial of the refund of the tax paid. 3. In such context inter alia on the premise that receipt of advances under the contract would not attract levy of GST, in the present proceedings ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a bridge for the Mumbai Trans Harbour Link (MTHL) Project (for short the project ). The project was being funded by the Japan International Co-operative Agency. The petitioner was formed as an unincorporated consortium of L T IHI, solely to bid for and if successful, execute the project. The petitioner was a successful bidder. A letter of acceptance was issued to the petitioner by MMRDA on 17 November, 2017. A Consortium Agreement dated 22 December, 2017 was entered into between L T and IHI. Thereafter, a Contract Agreement dated 26 December, 2017 was entered between MMRDA and petitioner. 5. The petitioner, as also the consortium members of the petitioner obtained registration under the GST laws, in compliance with the GST provisions. For the execution of the project work, purchase orders dated 23 March, 2018, back-to-back with the Contract Agreement, were issued by the petitioner to its members, i.e., L T and IHI. The members of the petitioner would raise bills on the petitioner for the portion of the work executed by them each month. In turn, the petitioner would raise a single consolidated invoice on the client, namely, MMRDA. Being back-to-back contracts, there was virtually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2018 indicating the amount received and the GST. Under the contract, such sequence was repeated for the next tranche of advance/loan granted to the petitioner by the MMRDA, this time an amount Rs.32.62 crores (approx) was disbursed to the petitioner in September 2018 and the same was transferred to the petitioner s constituent L T. Such amount of Rs.32.62 crores was treated, accounted and remitted to the GST Department similar to the first tranche, Receipt Vouchers were issued by the petitioner to MMRDA and by L T to the petitioner. 10. On the aforesaid backdrop, the case of the petitioner is that the petitioner was precluded from availing of the Input Tax Credit ( ITC ) of the GST paid to L T (its constituent) for the reason that Section 16 (2) (b) of the CGST and MGST Act provided that no ITC could be taken unless the service had been received. The petitioner contends that at such point of time, the work under the contract was in progress and/or was yet to be commenced as would be understood by the GST laws, hence, the respondent proceeded on the basis that no services had been received by the petitioner from its constituent L T. It is contended that another reason being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the petitioner has contended that the government thus collects Rs. 110 crores as tax, while plainly only Rs.100 crores ought to have been collectible, being GST of 10% on the contract value of Rs.1000 crores. This, according to the petitioner, is due to the said arbitrary provisions of the GST Acts. 15. The petitioner contends that what is more concerning is the refund of unutilized input tax credit of Rs.10 crores, which becomes available once project work commences and which remains unutilized even after completion of the project, being denied to the petitioner by virtue of the proviso to Section 54 (3) of the CGST Act, since refund of unutilized ITC is restricted only to two situations mentioned in the proviso, i.e. (i) zero-rated supplies made without payment of tax; (ii) inverted duty structure, i.e., where the rate of tax on inputs (goods) is more than the rate of tax on output supplies. Hence, according to the petitioner, such balance of Rs. 10 crores remains unutilized, especially since the petitioner has been constituted only for the purposes of this particular government contract. This restriction on the grant of refund, even in a situation where the government collects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being arbitrary, unreasonable, discriminatory and violative of the provisions of Articles 14, 19 (1) (g), 265 and 300A of the Constitution of India; d. in the nature of a Writ of declaration, declaring that input tax credit may be availed under section 16 of the CGST Act, and under section 16 of the MGST Act, on the basis of a receipt voucher issued under Section 31 (3) (d) of the CGST Act and section 31 (3) (d) of the MGST Act respectively, notwithstanding the non-inclusion of receipt voucher under Rule 36 of the CGST Rules, 2017 and under Rule 36 of the MGST Rules, 2017 respectively; e. in the nature of a Writ of declaration, declaring the proviso to section 54 (3) of the CGST Act, and the proviso to section 54 (3) of the MGST Act, as being arbitrary, unreasonable and violative of the provisions of Articles 14, 19 (1) (g), 265 and 300A of the Constitution of India; f. Writ of Mandamus or any other appropriate Writ order or direction of this Hon ble Court, ordering and directing the Respondent No. 3 to forthwith refund to the Petitioner, together with applicable interest, the sum of Rs. 32.02 crores remitted by the Petitioner (under Respondent No. 3 acknowledgment bearing ARN No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o taxable service as loan is not included in definition of services under clause 102 of Section 2 of the CGST Act. In such event, such activity would not qualify as input services for the Company. It is contended that for such reason, the petitioner would not be eligible to take Input Tax Credit on the amount of GST paid by it to L T. It is next contended that in case, if such activity was loan as claimed by the petitioner i.e. non-taxable service, then the provisions of Sections 7, 12, 13, 16 and 54 of the CGST Act read with Rule 36 of the CGST Rules are not applicable in the present facts. 20. In dealing with the grounds as raised in the writ petition, it is contended that part of the provisions of Section 7 in so far as it relates to services agreed to be made cannot be considered as ultra vires Article 246A read with Article 366 (12A) of the Constitution of India. It is contended that Article 366 (12A) of the Constitution of India defines Goods and Services as tax imposed on the supply of goods, services, or both, with the exception of taxes levied on the supply of alcoholic liquor for consumption by humans , would not restrict the meaning of the word supply , as supply already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubro has also paid GST, which tantamounts to excess payment of GST to the Government is not a tenable proposition. It is lastly contended that the upfront amounts received by the petitioner from the MMRDA were advance for mobilization and not loan and hence, were clearly hit by the provisions of Section 76 (1) of the CGST Act. It is contended that if such activity was loan as claimed by the petitioner, then there would be no taxable service, for the reason that loan is not included in definition of services under clause 102 of Section 2 of the CGST Act. In such event, the activity would not qualify as input services for the petitioner. It is stated that for such reasons, the petitioner would not be eligible to take Input Tax Credit on the amount of GST paid by the company to M/s. Larsen Toubro Ltd. on the said activity. Further, in case if such activity was loan, as asserted by the company i.e. non-taxable service, then the provisions of Sections 7, 12, 13, 16 and 64 of the CGST Act are not applicable in the instant matter. It is thus submitted that the petition be dismissed. Reply affidavit on behalf of respondent nos. 2 and 4 23. On behalf of respondent nos. 2 and 4, Dr. David T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner s case that Clause 14.2 of the Contract Agreement uses the word Loan , it is contended that it is essentially advance payment for adjustment against the future running bills. It is stated that in any event it is well settled that nomenclature of transactions is not relevant and it is to be construed on the nature of transaction. 26. Insofar as the case of the petitioner on refund is concerned, it is contended that the petitioner has already availed of a remedy of making a refund application, which has been rejected and against which an appeal is filed which is pending before the Appellate Authority. 27. It is next contended that this is a case where MMRDA has paid advance money along with tax to the petitioner. Therefore, the tax element included in such advance payment amounts to collection of tax and would be required to be included in the amount of treasury, hence, the petitioner rightly deposited the tax collected in the treasury since the same could not have been retained by the petitioner as per the provisions of Section 16 of the GST Act. Petitioner s Rejoinder Affidavit to Respondent No. 3 s Reply Affidavit:- 28. A rejoinder affidavit filed on behalf of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is, without the happening of the taxable event. In the alternative, it is contended that where the taxable event is treated as having happened by way of statutory fiction, then such fiction cannot be arbitrarily curtailed, but has to be given its full effect upon which ITC would be available immediately upon the tax being remitted on the advance, notwithstanding the non-inclusion of receipt voucher by the rule-making authority under Rule 36 of the CGST Rules. It is contended that the tax on supply cannot be imposed where the supply is yet to take place. Further it is contended that payment of mobilization advance is not the taxable event contemplated in the Constitution. 30. It is next contended that interestingly the respondents refer to taxpayers as subjects , an monarchical anachronism in a constitutional democracy. It is contended that clearly, such outdated perception that has formed the respondents' view that input tax credit is only a concession, when clearly it is an integral part and vested right under the GST regime. It is next contended that non-inclusion of the receipt voucher is unconstitutional. For such reasons, it is prayed that the petition would be requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by creating a fiction. It is also contended that the Constitution enables levy of tax on supply of services and not on receipt of payment . In other words, the taxable event is the supply and not receipt of payment. It is contended that it is not permissible for the legislature to alter the taxable event. 34. It is next contended that the respondent ought not to conflate between the wording of the provisions, the constitutionality of which is challenged by the petitioner and as to how the provision would be required to be interpreted. It is contended that the question whether the payment is an advance or a loan falls for consideration under the statutory proceedings and the issues as raised in this writ petition are de hors the 'advance versus loan' issue. It is contended that in other words, be it an advance or loan, the issues here are whether GST could be levied merely because payment has been made even though service has not in fact been rendered and in the context of what Sections 7, 12 and 13 of CGST Act would provide, and further whether on GST so paid, the corresponding ITC may however be denied until service in fact is rendered (Section 16 (2) (b) versus Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan, including the GST thereon, is to be recovered by MMRDA from the stage-wise payments and thus there is no question of unjust enrichment of the petitioner. It is next stated that the petitioner, by abundant caution, has also issued credit notes to MMRDA with regard to the GST portion. It is stated that in any case, the fact that GST was paid voluntarily cannot be put against the petitioner. As the issue is whether in law, the respondents are entitled to levy GST on the loan amount received by the petitioner from MMRDA. 37. It is next contended that the omission to include receipt voucher under Rule 36 of the CGST Rules as a document based on which ITC may be availed is bad in law, when Section 16 (2) (b) is to be read harmoniously with Section 13 (2) and the Explanation thereto, that the goods/services are deemed to have been received (to the extent of payment) for taking ITC. It is stated that the omission to include receipt voucher under rule 36 of the CGST Rules as a document based on which ITC may be availed is bad in law, since the rule-making authority has failed to effectuate the statutory provisions, thereby depriving the assessees of the benefit conferred by the Parlia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be issued for advance payments. The constitutionality of the same is challenged by the petitioner. 40. It is next contended that since ITC was denied at the relevant time, it results in accumulation of ITC. However, Section 54 precludes refund of such accumulated ITC. Hence, the constitutionality of the relevant portion of Section 54 too is challenged. In conclusion, it is contended that the Writ Petition challenges the constitutional validity of the provisions of CGST/MGST Act and Rules and seeks refund of the tax collected without authority of law. Hence, it cannot by any means be contended that the Writ Petition or any one of the prayers have become infructuous. It is, therefore, contended that the petition necessarily requires adjudication. Second Clarificatory Affidavit on behalf of the Petitioner 41. There is a second clarificatory affidavit on behalf of the petitioner to contend that the oral plea as taken on behalf of the respondents that the petition had become infructuous was misconceived. In such context, it is contended that respondent nos. 2 and 4 were under the misapprehension that since the work in question had begun, the service had now been received and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the project, the petitioner has a back-to-back agreement with its constituents (M/s L T Ltd, India and M/s IHI Infrastructure Systems Co Ltd, Japan). Thus, whatever payment + GST the petitioner receives from MMRDA (including loans/advances) is made over to the petitioner's constituents. Therefore, whatever GST is paid as input tax to the constituents is available as ITC and matches with, and is utilisable for, the payment of the petitioner's output tax obligations. It is contended that in the matter of the loan/ advance, the petitioner could not take ITC of the input GST paid to its constituents since no work was done owing to Section 16 (2) (b) of the CGST Act, 2017. Therefore, the output GST on the loan/ advance received from MMRDA had to be remitted in cash. It is further stated that the loan/advance from MMRDA and the corresponding loan/advance to the petitioner's constituents is adjusted proportionately over the period of the contract against the stage-wise invoices. It is stated that where a loan/advance (which has suffered GST) is given upfront but is recovered/adjusted over the period of the contract, the supplier issues stagewise invoices for the full a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that either way, the petitioner is prejudiced and thus the petition ought to be allowed by holding that the petition has not become infructuous. D. Submissions on behalf of the Petitioner:- 45. Mr. Arvind Datar, learned Senior Counsel for the petitioner has made the following submissions in support of the reliefs prayed by the petitioner:- 46. Larsen Toubro Ltd. and IHI Infrastructure Systems Co. Ltd., Japan (for short L T/IHI ) formed a consortium and emerged as a successful bidder in the MMRDA s project to construct a Trans Harbour Link, a 22 Km 6 lane road bridge, connecting Mumbai with Navi Mumbai. The consortium had entered into a Contract Agreement with the MMRDA. The consortium was formed with a Japanese partner in view of the Special Terms for Economic Partnership (STEP) of Japanese ODS Loans as per JICA Operational Rules, and for technical collaboration. The work to be done / goods to be supplied by L T/IHI were specified in separate work orders. The work was to be carried out on back-to-back basis. The consortium was merely a pass-through entity. All payments received by it would be made over to L T and/or IHI. As per clause 14.2 of the Contract Agreement, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 108 10 Aggregated of subsequent back-to-back payments by the Consortium to L T and IHI (net of recovery of cl. 14.2-payments) 900+108 GST 11 Consortium s INPUT Tax (sl.No.10), available as ITC 108 12 Thus, output tax under sl. no.9 is remitted thru ITC 108 NET RESULT 13 Amount of ITC remaining un-utilisable with the Consortium = sl. no.6 12 If s. 16 (2) (b) had not arbitrarily denied ITC until supply is effected (despite tax being remitted on upon receipt of the cl. 14.2-payment), the liability at sl. no. 4 would have been paid out of the ITC at sl. No .6. There is thus outgo of cash twice from the consortium, and consequently receipt of cash twice by the government. 48. It is hence submitted that after collecting GST on supply / service to be made, input tax credit of the same is denied until supply is effected, constitutes the challenge to Section 16 (2) (b) of the CGST Act. 49. The next submission is in regard to the procedural denial of ITC. It is submitted that even proceeding on the basis that such ITC is available, claiming the same would stand procedurally blocked since the receipt voucher, namely the document being issued by the petitioner for receipt of the advance, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 51. In such context, it is further submitted that the CGST Act tacitly recognizes that supply ought to have been made for GST to be levied, and hence, the legal fiction in the Explanation below Section 13 (2) that supply is deemed to have been received to the extent of payment, would create an anomalous situation, for the reason that any legal fiction to enlarge the subject matter of taxation, can be made only by a Constitutional amendment as was done with the 46th Constitutional Amendment in the matter of sale tax by inserting Article 366(29A). In supporting the proposition, reliance is placed on the decision of the Supreme Court in State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. AIR 1958 SC 560. 52. It is next submitted that none of the taxation entries in the Constitution for example Entry 82 (taxes on income), Entry 83 (duties of customs) of List I, or Entry 54 (taxes on sale) of List II contemplate taxation of an event yet to take place. In such context, reliance is placed on the decision of the Supreme Court in K. L. Johar And Company vs Deputy Commercial Tax Officer AIR 1965 SC 1082 wherein in regard to the hire purchase contracts, it was held that tax can only be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is received. It is submitted that this is plainly arbitrary and creates a serious hardship because the supplier is unable to utilize the ITC towards any output tax that he may be liable, for such reason Article 300A would stand breached in such situation. This would also go against the professed purpose of GST, as well as the formal Statement of Objects and Reasons (S.O.R.) attached to the CGST Bill which provides the object of CGST legislation to be to broad base the input tax credit by making it available for taxes paid on any supply of goods or services or both used or intended to be used in the course or furtherance of business. 55. It is next submitted that the restriction in Section 16 (2) (b) is plainly against the Statement of Objects and Reasons of the enactment which also mentions that the GST regime was intended to effect seamless transfer of input tax credit from one stage to another in the chain of value addition. 56. It is submitted that in recognizing this hardship and anomaly, Notification No.66/2017-CT dt. 15 November 2017 was issued granting an exemption for the advances made for supply of goods inter alia providing that no GST is required to be paid while makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Rules cannot take away what a Statute provides. It is also settled that tax credit cannot be denied because a document other than a prescribed document forms the basis of a claim so long as the claim is genuine. This proposition is supported by referring to the decision in Commissioner of Central Excise, Goa Vs. Essel Propack Ltd. 2015 (39) S.T.R. 363 (Bom.). It is for such reason and to dispel such cloud, a declaration is sought to the effect that ITC may be taken on the basis of a receipt voucher. 59. In regard to the challenge of the petitioner in prayer clause (d) about the denial of refund of unutilised ITC, it is submitted that this challenge arises only in the unlikely event of the earlier challenges, as raised by the petitioner, failing. It is submitted that after levying tax on supply agreed to be made contrary to the Constitution, and after denying ITC (even though tax is paid) until service is actually received, the denial of which leads to accumulation of unutilised ITC, the proviso to Section 54 (3) excludes refund of such unutilised ITC. This results in the Government collecting tax twice over, as explained in the table as noted above, which would be violative of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2022) 2 SCC 603. Ms. Cardozo submits that Supreme Court in paragraph 110 of this decision has observed that refund of unutilised ITC is available only in case of inverted tax structure and in cases of zero rated supplies and there is no constitutional entitlement to refund. It is, therefore, her contention that the petitioner is not eligible for refund as per the decision of the Supreme Court. 63. Ms. Cardozo, relying on the written submissions filed on behalf of GST Council, would not dispute that the Receipt Voucher needs to be recognized as an invoice and it would be a document on which ITC can be claimed. However, she would submit that the petitioner ought not to be granted any relief on ITC for the reason that the claim of the petitioner for refund of the GST has been rejected. She would submit that in fact, such prayer in the petition ought not to be entertained and the petitioner ought to have independently applied for availing of the ITC. Ms. Cardozo in fact, has an objection in the petitioner raising a contention that the Receipt Voucher was not recognized as a tax paying document for the petitioner not being permitted to avail the ITC. According to her, this is an inappr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time, it could be assumed that ITC was not available to be utilized for the reason that the services were not provided or received, but on a later date, when the services were provided, such ITC was available and it can be safely presumed that ITC was not available at the time of receiving payment, however, in due course of time when service was provided, ITC is utilized full against the outward supply of services. 70. Mr. Sonpal submits that the Receipt Voucher (RV) is not a document specified under Rule 36 of the CGST Rules and, therefore, the petitioner cannot claim ITC under Section 16 (2) (a). Thus, the receipt voucher cannot be treated as an invoice under Section 31 (2) nor it is the case of the petitioner that the same is treated as an invoice and hence the petitioner was not eligible to claim ITC. On the refund of unutilized ITC, it is submitted that under Section 54 read with Rule 89, refund of unutilised ITC can be claimed only in case of zero rated supply of export or on account of inverted duty structure and as the petitioner does not fall in any one of them, the question of granting refund to the petitioner does not arise. It is next submitted that as per Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not on future supplies. The definition sought to be made between the goods and services by the respondents is contrary to the object of the Constitution (101st Amendment) Act which provides for a common national market for goods and services based on logo One Nation One Tax . There cannot be intelligible distinction between the goods and services and why the services are not exempted when the goods are exempted qua advance receipt. 75. We have heard learned counsel for the parties and with their assistance, we have perused the record. We now proceed to discuss the issues which fall for our consideration in the present proceedings, so as to arrive at an appropriate conclusion . I. Discussion and Conclusion:- 76. At the outset, the facts, which are not in dispute, are required to be noted. The petitioner is an unincorporated consortium of its two constituents, L T and IHI. It participated in the bids invited by the MMRDA for the construction of the Mumbai Trans Harbour Link Project (MTHL) . On 17 November 2017, a letter of acceptance of its bid was issued by the MMRDA, to the petitioner. After a Consortium Agreement dated 22 December 2017 was entered between the petitioner and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by the Contractor as indicated in the Payment Certificates. If the terms of the guarantee specify its expiry date, and the advance payment has not been repaid by the date 28 days prior to the expiry date, the Contractor shall extend the validity of the guarantee until the advance payment has been repaid. Unless stated otherwise in the Contract Data, the advance payment shall be repaid through percentage deductions from the interim payments determined by the Engineer in accordance with Sub-Clause 14.6 [Issue of Interim Payment Certificates] as follows: (a) deductions shall commence in the next Interim Payment Certificate following that in which the total of all certified interim payments (excluding the advance payment and deductions and repayments of retention) exceeds 30 per cent (30%) of the Accepted Contract Amount less Provisional Sums; and (b) deductions shall be made at the amortisation rate stated in the Contract Data of the amount of each Interim Payment Certificate (excluding the advance payment and deductions for its repayments as well as deductions for retention money) in the currencies and proportions of the advance payment until such time as the advance payment has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis supplied) 78. On a bare reading of clause 14.2 of the contract agreement (supra), it is quite clear that the parties agreed that the employer (MMRDA) shall make an advance payment which would be an interest free loan, which could be so treated by the parties, by acting in the specified manner, as clauses 14.2 and 14.3 would require. Such advance payment was to be utilized for mobilization and design, being the project works, inter alia on the conditions as agreed between the parties. In our opinion, a reading of Clause 14.2 of the contract agreement cannot be read to mean to be a clause simplicitor providing for loan and its mere repayment, for the reason that the clause makes an allowance, for adjustment of the advance amounts, that become payable to the petitioner under the contract, under such clause. This is quite explicit form the plain reading of these clauses. It also appears that considering such nature of the clause, the petitioner accepted advances under the said clause, as mobilization advances. Also, the parties have agreed under these clauses that the Engineer shall deliver to the employer-MMRDA, and to the petitioner an Interim Payment Certificate for the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not have any relation with the performance of the contract. This apart, the advance payment as specifically agreed between the parties under clause 14.2 is for the purpose of mobilization and design, hence, even on such count necessarily it is integral to the contractor (petitioner) and its constituents, discharging their obligations under the contract. 81. Having examined the nature and working of the advance payment arrangement as contemplated under the said clauses of the contract agreement, we examine as to how the parties understood and acted upon the advance payment falling under these clauses 14.2 and 14.3 of the contract agreement. It is not in dispute that for execution of the project work, purchase orders dated 23 March 2018 back-to-back with the Contract Agreement, were issued by the petitioner to its member, i.e. L T. Reciprocally the constituent of the petitioner would raise bills on the petitioner for the portion of the work executed by it each month. In turn, the petitioner would raise a single consolidated invoice on the employer (MMRDA). On availing of these advances, the petitioner issued advance receipt vouchers to the MMRDA for both the first and second ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rencies and proportions less GST Component 9954 Rs.2,237,281,644 $ 6,646,392 - - A Total Amount Before Tax (A) Rs.2,237,281,644 $ 6,646,392 - - (B) Exchange Rate Rs. 1.0000 Rs. 64.8660 A Total Amount Before Tax (AXB) Rs. 2,237,281,644.07 Rs. 431,124,887,66 CGST @ 6% Rs. 134,236,899 Rs. 25,867,493 - - SGST @ 6% Rs. 134,236,899 Rs. 25,867,493 - - Total GST Amount Rs. 268,473,797 Rs. 51,734,987 - - Total Invoice Value (in Figure) Rs. 2,505,755,441 Rs. 482,859,874 - - Total Invoice Value (in words) Rupees Two Hundred Fifty Crore Fifty Seven Lakh Fifty Five Thousand Four Hundred Forty One Only Rupees Fourty Eight Crores Twenty Eight Lakh Fifty Nine Thousand Eight Hundred and Seventy Four Only Signature of Authorized Representative of the Contractor Name: Dr. Na, Yung Mook Designation: Project Manager MTHL - Pkg-01 (emphasis supplied) 82. Similar document (advance receipt voucher) was issued by the petitioner to the MMRDA qua the second tranche of advance payments. On receiving the first installment of advance payment, the petitioner remitted such advance to its constituent L T together with the GST of Rs. 32.02 Crores. L T in turn issued to the petitioner a Receipt Voucher dated 28 Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I Prime Lending Rate is Applicable For Delayed * I Inclusive Of Contract Value Our GST Reg. No. : 27AAACL0140P5ZF Intra State CGST 6.00% SGST 6.00% E. O. E For Larsen Toubro Limited, Construction Authorised Signatory 83. Subsequently, in September 2018, the second tranche of the advance together with the levy of GST of Rs.32.62 Crores, was received from the MMRDA. The GST amount was accounted and remitted to the GST Department by the petitioner. On receipt of the second advance payment, the amounts, back to back were remitted by the petitioner to its constituent L T, who issued a Receipt voucher to the petitioner similar to the one as noted hereinabove. 84. From the reading of the advance receipt voucher dated 06 March 2018 (supra) as also a similar advance receipt voucher from the second tranche issued by the petitioner, it is clear that what was sought by the petitioner from the MMRDA under clause 14.2, was a mobilization advance which necessarily formed part of the contract consideration. For this reason, merely because clause 14.2 inter alia refers to such amount, to be an interest free loan, it appears that the petitioner neither demanded the advance as an interest free loan n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes- (a) the integrated goods and services tax charged on import of goods; (b) the tax payable under the provisions of sub-sections (3) and (4) of section 9; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; (d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; (63) input tax credit means the credit of input tax; (66) invoice or tax invoice means the tax invoice referred to in section 31; (82) output tax in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis; (83) outward supply in relation to a taxable per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified that the expression services includes facilitating or arranging transactions in securities;] [(102A) specified actionable claim means the actionable claim involved in or by way of (i) betting; (ii) casinos; (iii) gambling; (iv) horse racing; (v) lottery; or (vi) online money gaming;] (105) supplier in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied; [Provided that a person who organises or arranges, directly or indirectly, supply of specified actionable claims, including a person who owns, operates or manages digital or electronic platform for such supply, shall be deemed to be a supplier of such actionable claims, whether such actionable claims are supplied by him or through him and whether consideration in money or money's worth, including virtual digital assets, for supply of such actionable claims is paid or conveyed to him or through him or placed at his disposal in any manner, and all the provisions of this Act shall apply to such supplier of specified actionable claims, as if he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as resulted in a situation that although the petitioner deposited the GST with the government, Input Tax Credit (ITC) of such GST paid by the petitioner was not available to the petitioner, as actual service had not taken place. Alternatively, it is contended that as there was no supply being received, there was no question of any tax being levied/deposited on a deferred supply. It is hence urged that although the petitioner had deposited GST with the department, the petitioner had become entitled firstly for a refund on the ground that there was no supply and secondly, if not a refund, the petitioner was entitled for Input Tax Credit (ITC). The petitioner being denied the refund as also the ITC, it is the petitioner s case that the provisions of Sections 7, 12, 13, 16 (2) (b) are ultra vires the Constitutional provisions and/or provisions of CGST / MGST Act, noted by us hereinabove. 89. We may observe that at the first blush, some of the petitioner's contentions on the vires of the assailed provisions, although sounded attractive, however, on a deeper scrutiny, the challenge to the vires of the provisions in the context in hand, apart from being misconceived, needs to fail. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islature judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Dond 354 US 457 where Frankfurter, J. said in his inimitable style: In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial difference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events-self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability. The court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry that exact wisdom and ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd by the High Court. In such context, the Supreme Court made the following observations: 13. In our opinion, the High Court was clearly in error in declaring Clause (d), Article 45 of Schedule 1-A of the 1899 Act which as brought in by the M.P. 2002 Act as violative of Article 14 of the Constitution of India. It is very difficult to approve the reasoning of the High Court that the provision may pass the test of classification but it would not pass the requirement of the second limb of Article 14 of the Constitution which ostracises arbitrariness, unreasonable and irrationality. The High Court failed to keep in mind the well defined limitations in consideration of the constitutional validity of a statute enacted by Parliament or a State Legislature. The statute enacted by Parliament or a State Legislature cannot be declared unconstitutional lightly. The court must be able to hold beyond any iota of doubt that the violation of the constitutional provisions was so glaring that the legislative provision under challenge cannot stand. Sans flagrant violation of the constitutional provisions, the law made by Parliament or a State Legislature is not declared bad. 14. This Court has repeat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that it provided a procedure which was substantially unfair to the owners of the land as compared to the procedure prescribed by the Land Acquisition Act, 1894, insofar as Section 11 of the Act provided for payment of compensation in instalments if it exceeded rupees two thousand. After noticing the several features of the Act including the one mentioned above, this Court observed: (SCC p. 526, para 7) 7. When a statute is impugned under Article 14 what the court has to decide is whether the statute is so arbitrary or unreasonable that it must be struck down. At best, a statute upon a similar subject which derives its authority from another source can be referred to, if its provisions have been held to be reasonable or have stood the test of lil' file, only for the purpose of indicating what may be said to be reasonable in the context. We proceed to examine the_ provisions of the said Act upon this basis. 44. It is this paragraph which is strongly relied upon by Shri Nariman. We are, however, of the opinion that the observations in the said paragraph must be understood in the totality of the decision. The use of the word 'arbitrary' in para 7 was used in the sense of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvalidate a statute lightly, for, as observed above, invalidation of a statute made by the legislature elected by the people is a grave step. As observed by this Court in State of Bihar v. Kameshwar Singh: (AIR p. 274, para 52) 52 The legislature is the best judge of what is good for the community, by whose suffrage it comes into existence .... 57. In our opinion, the court should, therefore, ordinarily defer to the wisdom of the legislature unless it enacts a law about which there can be no manner of doubt about its unconstitutionality. 24. In Hamdard Dawakhana and another v. The Union of India and others, AIR 1960 SC 554 , inter alia, while referring to the earlier two decisions, namely, Bengal Immunity Company Ltd. and Mahant Moti Das, AIR 1959 SC 942, it was observed in paragraph 8 (at pg. 559) of the Report as follows: 8. Therefore, when the constitutionality of an enactment is challenged on the ground of violation of any of the C articles in Part Ill of the Constitution, the ascertainment of its true nature and character becomes necessary i.e. its subject-matter, the area in which it is intended to operate, its purport and intent have to be determined. In order to do so it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner, would fall. It is the petitioner s contention that on receipt of such advance payment, no liability had arisen to pay tax. Such contention needs to be considered by examining the relevant provisions in relation to Scope of Supply (Section 7), Levy and Collection (Section 9) as contained in Chapter III, and in relation to Time of Supply of Services - (Section 13), as contained in Chapter IV. These provisions are required to be noted which read thus:- CHAPTER III LEVY AND COLLECTION OF TAX 7. Scope of Supply - (1) For the purposes of this Act, the expression supply includes-- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; [(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Explanation For the purpose of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF SUPPLY Section 12. Time of supply of goods. - (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of goods shall be the earlier of the following dates, namely:-- (a) the date of issue of invoice by the supplier or the last date on which he is required, under [ * * * ] section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply: Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount. Explanation 1.-- For the purposes of clauses (a) and (b), supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. Explanation 2.-- For the purposes of clause (b), the date on which the supplier receives the payment shall be the date on which the payment is entered in his books of account or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or (c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply: Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount. Explanation .--For the purposes of clauses (a) and (b)-- (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment; (ii) the date of receipt of payment shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. (3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation . The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council. 366. Definitions. In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say (12A) goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption . 95. On a plain reading of Section 7, the expression supply includes all forms of supply of goods or services or both , such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration (as defined und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrying on of the business to bring the gift within that provision and that it must further be established that there was some integral connection or relation between the making of the gift and the carrying on of the business. The relevant observations of the Supreme Court are required to be noted which read thus: 6. The words in the course of were considered by this Court in State of Travancore Cochin Vs. Shanmugha Vilas Cashew Nut Factory, 1954 SCR 53 (AIR 1953 SC 333) in connection with the language employed in Article 286 of the Constitution. It was pointed out that the word course etymologically denotes movement from one point to another and the expression in the course of not only implies a period of time during which the movement is in progress but also postulates a connected relation. There Clause 1 (b) of the Article was under consideration and what was exempted under the clause was the sale or purchase of the goods taking place in the course of the import of the goods into or export of the goods out of the territory of India. The only assistance which can be derived in the present case is the emphasis on there being connected relation between the activities for which thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Schedule II, which includes works contract as defined in Section 2 (119), finding place in item 6 of Schedule II defining a composite supply . Thus, the legislative intention behind Section 7 is quite clear that such composite contract would fall within the definition of supply as envisaged by Section 7 (1) (a). 100. This apart, such meaning of the word supply as Section 7 (1) (a) would postulate, can also be gathered from the reading of Section 7(1)(aa), which was inserted by the Finance Act No. 13 of 2021, with effect from 1 January 2022, which inter alia provides for the activities or transactions, by a person other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. The Explanation below section 7(1)(aa) also provides that the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. 101. We find that the common thread running through the provisions of sub-section (1A) and sub-section (1)(aa) of Section 7 discerns that the word supply cannot be given a meaning de h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g discussion would show that no valid ground can be gathered, for such provision to be held ultra vires the said constitutional provisions, for this reason, the petitioner s challenge to the vires of Section 7 on the ground that it applies to supplies agreed to be made is not well founded. 105. We may observe that Section 9 of the CGST Act providing for Levy and Collection ordains that subject to the provisions of sub-section (2), there shall be levied a tax called the Central Goods and Services Tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption. Section 9 is the charging section. Hence, going by Section 9, for all supplies of goods or services, i.e., services as defined under Section 2(102), tax under the CGST shall be payable. The advance amount as received by the petitioner and forming subject matter of the present proceedings, certainly relates to the activities requiring the use of money or its conversion by cash or by any other mode integral to the contract in question. It is also not in dispute that the contract in question is a contract involving intra-State supply of goods or services or both. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment, whichever is earlier. Explanation for the purposes of clauses (a) and (b) provides that the supply shall be deemed to have been made, to the extent it is covered by the invoice or, as the case may be, the payment; and further that the date of receipt of payment shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. Sub-section (5) of Section 13 provides that where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall be as provided in clauses (a) and (b) thereunder, that is in case where a periodical return has to be filed, be the date on which such return is to be filed; or in any other case, to be the date on which tax is paid. 107. The petitioner s case challenging the vires of Section 12 and 13, is to the effect that these provisions are invalid and ultra vires as they apply to supply agreed to be made , for the reason that Article 246A applies only in respect of the supply of goods or services and not in relation to supply agreed to be made . It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of service, if the invoice is not issued within the prescribed period under Section 31 or the date of receipt of payment, whichever is earlier are included, to reckon the time of supply. Hence, if the parties agreeing to the nature of the supply, as the agreement between the parties in the present case postulate, and such supply if falls within the parameters of Section 7 (1) and in pursuance thereto a deposit of the GST is made, then necessarily such voluntary action on the part of the parties, is within the purview of section 7. In such event, necessarily, qua the time of supply of services, such supply would stand governed by sections 12 and 13. Thus, having regard to our reasons in repelling the challenge to the vires of Section 7, Sections 12 and 13 also cannot be held to be illegal or unconstitutional, when tested on the anvil of the provisions of Article 246A, 366 (12A) and much less on the touchstone of Article 14, 19 (1) (g) and 300A of the Constitution. We, hence, do not find that the petitioner is correct in its contention that the advances received by the petitioner from MMRDA would fall outside the purview of Section 9 read with Sections 7, 12 and 13 of GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity. In our opinion, considering our discussion on the interpretation of the provisions as also the context in hand, the aforesaid observations of the Supreme Court would not assist the petitioner. 111. The next decision of the Supreme Court on which reliance is placed is in the case of Garden Silk Mills Ltd. Vs. Union of India (supra) to canvass a proposition that once Article 246A read with Article 366 (12A) of the Constitution prescribed that the tax needs to be levied on supply of goods and services, it would not be permissible for the legislature to deviate from the constitutional ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case and more particularly applying the principles of the Constitution Bench of the Supreme Court as laid down in State of Madras v. Gannon Dunkerley Co. (supra). In this decision, entry 48 in List 2 of Schedule 7 of the Constitution fell for interpretation, when the Supreme Court held that the same is required to be interpreted not in a strict sense but in a broad sense. It was also held that such constitutional provisions cannot be construed in its popular sense, but must be interpreted in its legal sense. In our opinion, the petitioner merely referring to the provisions of Article 246A read with Article 366 (12A) of the Constitution which provide that the Parliament as also the State Legislature would be empowered to make laws in respect of goods and services tax to be imposed by the Union or a State, would be required to be interpreted in a broad sense. Thus, the Parliament as also the State Legislature were within their constitutional authority, to not only enact the provisions which are assailed by the petitioner, but also to prescribe / stipulate the manner and the method under which the scheme of the GST laws ought to work, in regard to the applicability of such provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of such inconsistency, necessarily Section 16 (2) (b) be held to be ultra vires the provisions of Section 13 (2) (b) of the CGST Act. 113. To examine such contentions of the petitioner, we need to note Section 16 providing for Eligibility and conditions for taking input tax credit , which falls under Chapter V Input Tax Credit . Section 16 reads thus: Section 16. Eligibility and conditions for taking input tax credit. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,-- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed 1 (aa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier. Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.] (emphasis supplied) 114. On a plain reading of sub-section (1) of Section 16, it is seen that it provides that every registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner s entitlement to avail of the ITC is concerned. In the context, peculiar to the facts in hand, we are of the clear opinion that applying the jurisprudential principles governing the goods and service tax and even on first principles, it cannot be a situation that in the circumstances, as in the present case, the petitioner could be denied the credit of ITC. This merely for the reason that, in the situation in hand, the petitioner although was complying with the other requirements, as the petitioner purportedly was unable to achieve compliances of Section 16 (2) (b) i.e. to receive an invoice, on the ground that the petitioner had not received the goods or services or both. This could not have been accepted to be the correct legal position against the petitioner. The reason being that the petitioner, a registered person as defined under section 2(94) which had deposited the tax with the government and having discharged its output tax obligation towards its constituent, was in a situation that under the contract and in the course of its robust certainty of its performance, the petitioner was in the process of generating supply of goods or services or both and/ or was in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asic requirement for the amount to be credited to the electronic credit ledger of such person. Although sub-section (1) is conditional upon the fulfillment of the requirements as contained in sub-section (2), in our opinion, the incorporation as contained in sub-section (2) (b) being one of the conditions, namely that the person has received the goods or services or both would also be required to be read, to further the intention as to what is provided for in sub-section (1) of Section 16, namely credit to be made available for supply of goods or services or both to the person when the goods and services were intended to be used in the course or furtherance of his business. The words intended to be used in the course or furtherance of his business would mean / include the deferred receipt of goods or services or both. Also, the word intended as used in sub-section (1) of Section 16 is required to be given its due meaning in applying the provisions of sub-section (2) (b) of Section 16, when it prescribes that the credit of any input tax would inter alia be available when the registered person has received the goods or services or both. If we do not read that the provision in such ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 16, as it stands and intended by the legislature. Any interpretation otherwise in our opinion would cause deleterious effect and a disharmony in the working of these GST provisions. For these reasons, the petitioner was entitled to the input tax credit under the provisions of Section 16 as in the present peculiar facts, merely referring to the provisions of Section 16 (2) (b), it could not have been denied to the petitioner. 120. Another hurdle as canvassed before us in denying the input tax credit, is on the ground of applicability of Section 16 (2) (a) which provides that for the entitlement to the credit of input tax, a registered person needs to be in possession of a tax invoice or debit note issued by a supplier registered under the Act or such other tax paying documents as may be prescribed as noted above. It is submitted that the meaning to the words Tax Paying Documents is required to be gathered from the provisions of Section 31 which provides as to what a tax invoice should be in the context and applicability of the CGST Act. Section 31 falls under Chapter VII which pertains to tax invoice credit and debit notes . In the present context a reference is made to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said document [** * ] [Provided that if the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by such registered person.] (3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts. [(4) No input tax credit shall be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished under sub-section (1) of section 37 unless,- (a) the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in Form GSTR-1 or using the invoice furnishing facility; and (b) the details of [input tax credit in respect of] such invoices or debi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the rigour and the mandate of sub-section (1) and (2) of Section 31 is not applicable to the operation of sub-section (3) which stands on its independent legs, when it recognises the tax paying documents as referred thereunder. In any event sub-section (3) of Section 31 is also required to be read in the context of the companion provisions namely sub-section (4), (5), (6) and (7). These provisions contemplate a variety of situations, even when at a belated stage, an invoice can be issued and which can be a situation of advance payment being received in relation to the transactions between the parties. Thus, Section 31 is required to be holistically read so as to make the provision meaningful and more particularly in the context in hand. For such reason, when the petitioner satisfied the requirements of Section 31 (3) (d) as also accepted by the revenue to be a tax paying document, it would not be correct in law that the petitioner is denied input tax credit, merely because the petitioner has not complied with the part of the provisions, namely sub-section (1) of Section 31 read with Rule 36. In any event, Rule 36 cannot control the operation of Section 31 being the substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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