Joint venture fails to prove work proportion across states for GST refund on intra-state supplies

The Telangana HC disposed of a petition concerning GST refund claims by a joint venture. The petitioner sought refund of excess tax deducted for work executed across Telangana and Maharashtra states. The court held that since the nature of supply was intra-state in respective states, tax liability should be discharged individually in each state equivalent to work executed therein. However, the petitioner failed to provide evidence of the proportion of work executed in each state or discharge of tax liability in Maharashtra. The court kept demand notices dated 13.03.2020 in abeyance pending disposal of refund applications in accordance with orders in related writ petitions.

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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.

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