Refund protection for Central Government works contracts: forfeiture under Rule 18(3)(b) cannot be extended beyond Section 22(3-A).

The Andhra Pradesh HC held that Rule 18(3)(b) of the Andhra Pradesh VAT Rules could not be used to deny refund or forfeit excess tax collected from a dealer executing a works contract for the Central Government through Indian Railways. Section 22(3) applies to works contracts for the Central Government, State Government and specified bodies, while Section 22(3-A), read with the definition of Government, is confined to the State Government and local authority. Because Rule 18(3) is tied to tax collected under Section 22(3-A), its forfeiture mechanism could not be extended to Central Government contracts. The dealer was entitled to refund of the excess amount with interest.

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Issues: Whether Rule 18(3)(b) of the Andhra Pradesh Value Added Tax Rules, 2005 could be applied to deny refund or forfeit excess tax collected from a dealer executing works contract for the Central Government through Indian Railways, when Section 22(3-A) of the Andhra Pradesh Value Added Tax Act, 2005 is confined to Government or local authority.

Analysis: Section 22(3) of the Andhra Pradesh Value Added Tax Act, 2005 covers deductions in respect of works contracts executed for the Central Government, the State Government and the other bodies mentioned therein. Section 22(3-A), read with the definition of Government in Section 2(18), is confined to the State Government of Andhra Pradesh and local authority. Rule 18(3) is expressly linked to tax collected under Section 22(3-A), and therefore its forfeiture mechanism cannot be extended to works contracts executed for the Central Government. The absence of coverage under Section 22(3-A) means the State could not refuse refund by invoking Rule 18(3)(b).

Conclusion: The refund could not be denied under Rule 18(3)(b), and the petitioner was entitled to refund of the excess amount with interest.

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