2021 (1) TMI 422 - HC - GST

Court Orders Timely GST Refund to Applicant Company, Resolving Financial Strain

The court directed the competent authority to refund the admissible amount of GST to the applicant company within a month, despite delays and disputes ... Refund of GST paid - reimbursement of the additional tax was delayed as a result of which appellant had to deposit tax from his own source - grievance of the applicant company is that despite deposit of GST from its own source, opposite parties failed to refund the applicant the tax component - HELD THAT:- It is not disputed that the tax liability has been deposited by the company but the company has not been reimbursed the sum due from the opposite party no. 2 despite the funds being released by the opposite party no. 1 - Learned counsel for the opposite party no. 1 submits that the Nodal Agency, Chief Executive Officer, U.P. Rural Road Development Authority, had twice reimbursed the tax component, however, it has not been released by the opposite party no. 2. The matter is serious and calls for attention of the highest officer of the State. Accordingly, the Principal Secretary, Public Works Department, U.P. Lucknow, shall summon the officers and get the matter settled. It is expected that the meeting of the respondent officials (1 and 2) shall be convened forthwith and the matter be settled. It is provided that in the event the Principal Secretary is of the opinion that the opposite party no. 2, Sri Niraj Singh, Executive Engineer, Construction Division-II, Hardoi, has been unnecessarily harassing and creating impediment in releasing the amount, it will be open for the Principal Secretary to initiate proceedings including the disciplinary proceedings against the opposite party no. 2. Affidavit of compliance to be filed on the date fixed. List on 18.02.2021. Issues:1. Reimbursement of GST to the contractor for ongoing contracts under the GST Act regime.2. Delay in refunding the tax component to the applicant company.3. Dispute over withholding the tax component by opposite party no. 2.4. Failure to credit the tax component to the applicant company despite funds being released.Analysis:Issue 1:The case involves the reimbursement of GST to a contractor for ongoing contracts under the GST Act regime. The applicant-company executed civil construction work before and after the enactment of the GST Act, resulting in a change in the tax structure regime. Guidelines issued by the Government of U.P. and NRIDA provided for reimbursement and refund of the increased tax amount, respectively. The applicant sought reimbursement for the additional tax equivalent to 8% on the remaining work value due to the change in tax rates.Issue 2:The delay in refunding the tax component to the applicant company led to the filing of a writ petition. The court disposed of the petition directing the competent authority to refund the admissible amount of GST within a month. Despite the company depositing the GST amount, the opposite parties failed to refund the tax component, causing financial strain on the applicant.Issue 3:Opposite party no. 2, the Executive Engineer, Construction Division-II, Hardoi, was accused of withholding the tax component and avoiding compliance by raising technical objections. The tax component was released by opposite party no. 1 but not credited to the applicant company by opposite party no. 2. The actions of opposite party no. 2 were deemed detrimental to the company's operations due to the lack of required capital.Issue 4:The applicant-company had deposited the tax liability, but opposite party no. 2 did not reimburse the due amount despite receiving funds from opposite party no. 1. The matter was considered serious, prompting the involvement of the Principal Secretary, Public Works Department, U.P. Lucknow, to convene a meeting and settle the issue. If deemed necessary, disciplinary proceedings could be initiated against opposite party no. 2 for hindering the reimbursement process.In conclusion, the judgment addresses the challenges faced by the applicant company in obtaining reimbursement of GST under the changed tax structure regime, highlighting delays and disputes with the opposite parties. The court's intervention aimed to ensure the timely refund of the tax component and resolve the issues causing financial hardship to the contractor.