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TMI Blog2024 (12) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the agreement as specified in the explanation to Section 12 (3) of IGST Act. As per Section 8(2) it can be observed that subject to Section 12 of the IGST Act, the supply of service shall be an intra-state supply when location of supplier and place of supply are in the same State. The issue whether the nature of supply is intra-state or inter-state under Sections 7 and 8 of the IGST Act, is dependant on the location of supplier and place of supply. Since the place of supply is determined depending on the proportion of work executed by L T PES and location of supplier in both the States, it falls under the category of intra-state supply under Section 8 of the IGST Act with respect to the proportion of works executed in respective States by the contractors registered in the respective States. Now it is clear that the nature of supply is intra-state supply in proportion to the works carried out in each State. When the nature of supply is intra-state, the tax liability shall be discharged individually in each State to the extent of proportion of the works executed therein. Discharge of GST Liability: S ince the nature of supply is of the intra-state, proportionate to the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 to July, 2019, respectively, for short payment of taxes. 2. Since, the issues arise out of the construction of a barrage (works contract) at Medigadda, Telangana, undertaken by the petitioner in both the writ petitions, the writ petitions are heard together and are disposed of by this common order. 3. The brief facts leading to filing of the Writ Petitions as contended by the petitioner are that the petitioner is an unincorporated Joint Venture (JV), comprising of two partners viz., Larsen Toubro Ltd (L T) and PES Private Limited. The petitioner has received a contract from respondent No.5 State of Telangana, for construction of Medigadda Irrigation Barrage at Kaleshwaram, State of Telangana. The petitioner has been chosen to execute the project based on the technical qualification criteria of the partners. The project is sponsored by the State of Telangana, but the execution of contract is spread between the States of Telangana and also Maharashtra. That there was a specific Inter-Board Agreement dated 23.08.2016 signed by both Telangana and Maharashtra States. For this purpose a special utility vehicle called as Kaleshwaram Irrigation Project Corporation Limited (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the turnover as applicable in the State of Telangana, GSTR-07A return which revealed higher value, since the TDS is deducted on the entire value of the bills raised by the petitioner from both the States. Therefore, respondent No. 1 called for details from the respondent No. 4 regarding total value of the bills, amount paid, TDS effected at source, copies of the GSTR-7A, and were reconciled, correlated with the returns submitted by the petitioner. 3.4. The respondent No. 1 made the petitioner liable in the State of Telangana on the entire bills raised on respondent No. 4 and accordingly, calculated the tax liability @ 12% and determined that the petitioner is liable to pay balance amount of tax of Rs. 118,29,29,167/- for the period of 01.07.2017 to 31.03.2019 and Rs. 14,28,54,110/- for the period of 01.04.2019 to 31.07.2019. Aggrieved by the order dated 13.01.2020, petitioner preferred appeal before respondent No. 6 Appellate Joint Commissioner (ST), Hyderabad on 03.02.2020 and the appeal has been heard by the respondent No. 6 and orders are awaited. 3.5. In the meanwhile, respondent No. 1 issued show-cause notice under Section 73 dated 31.01.2020 calling upon the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 226 of the Constitution of India and on that ground alone, the writ petition is not maintainable for want of proper authorization. 4.1. The respondent further contended that when the work was awarded by respondent No. 4 to the petitioner JV, GST had not come into force. That the petitioner had taken registration under TVAT Act only and TDS under TVAT was deducted for whole of the payments by the respondent No. 4. That the petitioner had accepted the deduction of the same without any demur and that there is nothing on record to show that petitioner had taken any registration under Maharashtra VAT like the GST registration. 4.2. It is contended that even though the JV was awarded the work, the work was executed by two independent incorporated companies (L T and PES), which had formed the JV. That one of the partners of the JV i.e., PES has taken registration under GST in the State of Telangana only, but has no registration in the State of Maharashtra and whereas, L T has taken registration under GST in both the States. That the petitioner had not revealed as to what extent of work was contributed by JV partners, i.e., PES and L T in Telangana on one hand and the contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the State of Telangana. The respondent No. 6 held in favour of the petitioner in view of the independent liability of petitioner in both the States as per Section 8(2) r/w. Section 12 (3) of the IGST Act and Section 2(71) of CGST Act. 6. Heard Sri S. Dwarakanath learned senior counsel for the petitioner and Sri Swaroop Oorilla, learned Special Government Pleader for Commercial Taxes appearing for the respondent Nos.1 6. 7. Learned senior counsel for petitioner submitted that the petitioner has undertaken irrigation project work sponsored by the State of Telangana. The contract works are spread between the States of Maharashtra and Telangana. The petitioner is a pass-through entity and got executed the project work through the partners, M/s. Larsen Toubro Limited (L T) and M/s. PES Private Limited, who are independent registered dealers in both the States of Maharashtra and Telangana. Petitioner takes the input tax credit based on the invoices issued by the partners and reduces the same against its output liability while raising bills before the respondent No. 4. The petitioner raised separate bills for the works done in State of Maharashtra and State of Telangana with its corresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be discharged in both the States. The said conclusion of the appellate authority has not been challenged by the respondents and therefore, the same has become final insofar as the application of Section 12 (3) of the IGST Act is concerned. 7.3. Learned senior counsel for petitioner further submitted that as there was excess amount of credit available in electronic cash ledger, petitioner made an application under Section 49 (6) read with Section 54 of the CGST Act for refund of Rs. 27,06,44,178/- for the period 01.07.2017 to 31.03.2019 and Rs. 10,12,54,118/- for the period 01.04.2019 to 31.07.2019 with the respondent No. 1. However, respondent No. 1 rejected the application by an order dated 13.01.2020. 7.4. Learned senior counsel for petitioner principally contended that impugned orders dated 13.03.2020 were passed ignoring the provisions of Section 12 (3) of the IGST Act and merely because the project is funded by the State of Telangana, it does not mean that petitioner has no liability to file returns and pay the taxes in the State of Maharashtra. Further, remittance of TDS by Respondent No. 4 to the State of Telangana on the entire value of the bills raised by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks undertaken by the petitioner and not section 12 (3) of the IGST Act. He further submitted that place of supply of services rendered by the petitioner is in Telangana as the respondent No. 4 is registered in Telangana, therefore, the services provided by the petitioner fall under Section 12 (2) (a) of the IGST Act. 8.1. The learned standing counsel for respondent Nos.1 and 6 submitted that respondent No. 4 does not have registration in Maharashtra and hence, they could not remit CGST and SGST in the State of Maharashtra for the works executed in the State of Maharashtra. He further submitted that the question of deducting tax at source on the turnover relating to Maharashtra State does not arise as there is no registered contractee to deduct tax at source. He further contended that entire cost of construction of barrage is borne by the State of Telangana; therefore, respondent No. 1 is justified in imposing tax. Consideration: 9. The issues that fall for consideration are as to: (i) Whether the work executed by petitioner JV falls under Section 12 (2) (a) or 12 (3) of IGST Act; and also the place of supply in such case. (ii) Whether the work carried out in respective States amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State in proportionate to value of services collected or determined in terms of contract. 11. It is relevant to note that the respondent No. 6 in the proceedings dated 12.10.2020 held that Section 12 (3) of the IGST Act shall apply to the subject project and the same has not been challenged. On the other hand, a plain reading of Section 12 (2) (a) which states that place of supply of services shall be the location of registered person to whom services are supplied except the services specified in Sections 12 (3) to 12 (14) of IGST Act. Therefore, Section 12 (2) (a) is applicable only to the services, which does not fall under Sections 12 (3) to 12 (14) of IGST Act. Learned senior counsel for petitioner rightly submitted that Section 12 (2) is a residuary provision and will apply only if the nature of the activity done by the petitioner does not fall under Section 12 (3) of the IGST Act. Therefore, contention of the counsel of respondent that the applicable provision is Section 12 (2) (a) of the IGST Act in view of the nature of works undertaken by the petitioner and not section 12 (3) is incorrect and untenable. 12. The construction of barrage is spread out in two States and the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective States. Now it is clear that the nature of supply is intra-state supply in proportion to the works carried out in each State. When the nature of supply is intra-state, the tax liability shall be discharged individually in each State to the extent of proportion of the works executed therein. 15. Since the nature of supply is of the intra-state, proportionate to the services rendered in respective States, the tax liability shall be discharged individually in each State for the proportion of work executed therein, as such tax liability should be discharged according to GST in each State. 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 has not placed on record any material evidencing discharge of tax liability in the State of Maharashtra. 16. Further, to discharge tax liability by independent contractors i.e., L T and PES, in each State, it is necessary to determine the proportion of work undertaken by each partner of JV in each State. To answer this question, it is necessary to examine the joint venture agreement entered into by two independent contractors to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the electronic cash ledger of the petitioner in the GST portal in excess of tax liability in the State of Telangana. In considered opinion of this Court, the reason recorded by the Appellate Authority i.e., respondent No. 6 for rejection of claim of refund by the petitioner is improper and unsustainable as admittedly the entire TDS amount deducted from the invoices raised even in respect of services rendered in the Maharashtra State is remitted to State of Telangana and is lying with the electronic cash ledger account of the petitioner. 19. Respondent No. 1 contended that respondent No. 4 ought not to have deducted the GST from the invoices of the work executed in the State of Maharashtra since the respondent No. 4-deducting contractee does not have registration in Maharashtra which is contrary to Section 24(vi) of the CGST Act which reads as under along with Section 51: Section 24. Compulsory registration in certain cases. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,- xxxxxxxxxxxxx (vi) persons who are required to deduct tax under section 51, whether or not separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had raised the dispute only after completion of project work. 21. Insofar as the entries in GSTR 3B and 7A and the contention of respondent No. 1 that the petitioner shall reveal full turnover in GSTR 3B returns is concerned, it is relevant to note that according to petitioner, it has raised separate bills for the works executed in Telangana and Maharashtra. However, admittedly, while deducting GST, respondent No. 4 deducted from both the bills and remitted the entire tax amount to Telangana. Therefore, there is a difference between the entries in GSTR 3B and GSTR 7A. 22. It is relevant to consider sub-sections in Section 52 of CGST Act which lays down the procedure for collection of tax at source, which reads as under: 52. Collection of tax at source. (1) Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator (hereafter in this section referred to as the operator ), not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unicated in such manner as may be prescribed. As per Section 52(4), respondent No. 4, being the operator, shall furnish all the details of supplies and the amount collected u/s. 52(1) during a month in GSTR 7A. As per Section 52(8), entries in GSTR 3B and in GSTR 7A shall be matched. In case the entries in GSTR 3B and GSTR 7A do not match, the discrepancy shall be communicated to both the petitioner, being the supplier and respondent No. 4, being the operator u/s. 52(9). If the discrepancy communicated is not rectified by both supplier and operator in their statements for the month in which discrepancy is communicated, the difference amount shall be added to the output tax liability of the supplier. 23. Though it is contended that petitioner has independently discharged tax liability in respect of works carried out in the State of Maharashtra with the concerned Tax Authorities, however, no material or proof has been placed on record in support of the said contention. Further, no material is placed on record as to the proportion of work executed by the respective J.V. Partners of the petitioner in the State of Maharashtra and admittedly one of the partners i.e., PES has not got regi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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