Differential GST reimbursement dispute after rate hike 12% to 18%: delayed invoicing blamed on supplier, writ dismissed.

In a writ seeking reimbursement of differential GST arising from an increase from 12% to 18%, the HC held that the principal's liability under the relevant circular to bear differential tax depends on the date of invoice/payment, but the delay in raising the invoice and receiving payment was prima facie attributable to the petitioner, not the respondent; hence denial of reimbursement was justified. The HC further held that the dispute turned on contested factual issues unsuitable for adjudication under Art. 226. The writ petition was dismissed, with liberty to pursue remedies before the competent civil court or arbitral forum.

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1. ISSUES PRESENTED AND CONSIDERED

1. Whether the petitioner was entitled, on the basis of the applicable GST "date of supply" rule, to reimbursement/remittance of the differential GST arising from the rate increase from 12% to 18% where invoices and payments occurred after the rate revision.

2. Whether the rejection of the differential GST claim was justified on the ground that the delay in raising invoices (and consequent higher GST incidence) was attributable to the petitioner rather than to the third respondent.

3. Whether the Court should exercise jurisdiction under Article 226 to decide entitlement to differential GST where the determination turned on disputed questions of fact relating to invoicing and payment timelines.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to differential GST based on "date of supply"

Legal framework: The Court considered Section 14(a)(i) of the Central Goods and Services Tax Act, 2017 as discussed in the judgment, which provides that for determining GST in a rate-change situation, the relevant "date of supply" is the date of issuance of invoice or the date of receipt of payment, whichever is earlier.

Interpretation and reasoning: The Court accepted that Section 14(a)(i) governs determination of applicable GST by reference to the invoice/payment trigger. The Court also noted that directions could be issued by following the Circular dated 10.02.2023 to the effect that where tax increases as on the date of payment or issuance of invoice, the principal would be liable to pay the differential tax. However, the Court treated applicability of this principle as dependent on the facts surrounding the timing and responsibility for the delay.

Conclusion: Although the Court recognized the governing rule and the possible relevance of the Circular in principle, it did not grant reimbursement because, on the facts found in this case, the higher GST incidence was linked to delay attributable to the petitioner.

Issue 2: Attribution of delay and justification for rejecting the differential GST claim

Interpretation and reasoning: The Court compared the work completion certificate date (08.06.2022) with the date from which the revised GST rate applied (18.07.2022) and noted that for over 40 days after completion, no invoice was raised before the rate revision. On the submissions recorded, the Court formed the view that the delay in raising the invoice prior to 18.07.2022 (and the resulting payment timeline) was attributable to the petitioner and could not be attributed to the third respondent. The Court reasoned that, in these circumstances, the higher GST could not be fastened upon the third respondent.

Conclusion: The Court upheld the rejection of the differential GST claim, holding that denial of reimbursement was proper because the default leading to the higher GST incidence was on the petitioner's side, not the third respondent's.

Issue 3: Maintainability under Article 226 in the presence of disputed facts

Interpretation and reasoning: The Court held that the matter involved disputed questions of fact, particularly relating to the invoicing/payment timeline and attribution of delay, and that such disputes could not be adjudicated in writ jurisdiction under Article 226. The Court therefore declined to entertain the writ petition on this ground as well.

Conclusion: The Court dismissed the writ petition, granting liberty to pursue remedies before the appropriate civil court or arbitral forum, with a direction that the merits be considered independently and without being influenced by the Court's observations.

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