TaxTMI 
TaxTMI 
2022 (5) TMI 183
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....e pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order directing the Respondents to grant reimbursement of Rs. 1,23,02,620 paid by the Petitioners under the GST Act towards contract dated 29.6.2017; C. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to direct the Respondents to grant reimbursement of Rs. 1,23,02,620 paid by the Petitioners under the GST Act towards contract dated 29.6.2017; D. Ex parte ad interim relief in terms of prayer C may kindly be granted;" 2. The facts giving rise to the present writ-application may be summarised as under : 3. The writ-applicant no.1 is a partnership firm having its place of business at Ahmedabad. The writ-applicant no.2 is the partner of the said firm. 4. The writ-applicants are the Government approved railway contractors since last 20 years. The writ-applicants had been awarded E-Tender No. Dy CE (C) P&D/ADI/ADI-HMT-16 by the Railways Board and an agreement was entered into on 29.6.2017. 5. The writ-applicants were registered under the Gujarat Value Added Tax Act, 2003 (for short, 'the VAT Act'). It appears that the writ-app....
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....eer of Railways generated a pay order on 10.2.2019 granting refund of the GST to the tune of Rs.1,23,02,620=00 after making statutory deductions. 13. The writ-applicants issued tax invoice on 11.2.2019 for collection of the amount under the GST Act. Thereafter, a letter was issued to the writ-applicants on 27.2.2019, inter alia, requiring them to give some clarifications, to which response was given by the writ-applicants on 1.3.2019. 14. The Deputy Chief Engineer, thereafter, wrote a letter to the writ-applicants on 5.4.2019 asking them to clarify as to why the input tax credit was shown to be 'Nil' in the working sheet for the refund of the GST even though the writ-applicants had discharged tax liability in the returns by utilizing the input tax credit. 15. The writ-applicants responded vide letter dated 10.4.2019 clarifying that the contract in question did not involve use of any goods in respect of which the input tax credit was admissible. The input tax credit which had been utilized for making the payment of tax in the GST returns was tax credit admissible in respect of other contracts. 16. The writ-applicants received a letter from the Deputy Engineer on 7.5.2019 again a....
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....the input tax credit accruing to the writ-applicants. Thus, it appears that the cumulative calculation of all the contracts which was being demanded by the officers was impossible and also beyond the requirement of the Joint Procedure Order. Thereafter, it appears that the writ-applicants gave several reminders to the respondents. 22. As the respondents have declined to release the GST refund/reimbursement, the writ-applicants are here before this Court with the present writ-application. SUBMISSIONS ON BEHALF OF THE WRIT-APPLICANT : 23. Mr.Uchit Sheth, the learned counsel appearing on behalf of the writ-applicants made the following submissions : (a) The non-release of the refund by the respondents on the ground that while tax paid through the cash ledger is only Rs.33,92,980=00, the refund cannot be claimed of Rs.1,23,02,620=00, is absolutely misconceived and not tenable in law insofar as the input tax credit is concerned. It is well established that the input tax credit is as good as tax paid. The input tax credit is admissible under the GST Act of tax actually paid on the inward supply, which is legally admissible as credit for the purpose of payment of the output tax. There....
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....have been furnished to the respondents and, in fact, the impugned communication dated 13.5.2019 is clearly based on such returns. Thus, the evidence regarding the payment of tax has already been furnished. The respondents are, however, refusing to grant refund on the basis that a part liability has been paid through the electronic credit ledger. Such stance of the respondents is completely erroneous and illegal. SUBMISSION ON BEHALF OF THE RESPONDENTS : 24. Mr.Siraj Gori, the learned counsel appearing on behalf of the respondents has relied upon the affidavit-in-reply filed by the respondents. He has made the following submissions: (a)The respondents are not averse to granting the GST refund/reimbursement to the writ-applicants. However, the writ-applicants are not able to substantiate their refund claim by showing the actual payment of the GST through the cash ledger and, therefore, the respondents are not releasing the refund/reimbursement to the writ-applicants. (b)The documents with respect to other contracts executed by the writ-applicants with the Railways are yet to be furnished and, therefore, the refund/reimbursement with respect to the present contract cannot be relea....
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.... state that in case there is any further change in the GST tax structure till the date of completion of work or any error is noticed in the calculation of amount payable/ recoverable till the release of Final Bill amount to contractor, the same shall be paid by the Railways or recovered from the contractor's bills/security deposit or any other dues of contractor with the Govt. of India. 3.3 In case while awarding the contracts, the reasonability of rates was justified by Tender committee considering the impact of GST, such compensation would not apply. 3.4 For neutralizing GST impact on the works contracts awarded before implementation of GST; along with documentary evidence, the contractor should submit work sheet of tax liability before GST and after GST duly certified by chartered accountant engaged by him. The tax liability of the contractor before implementation of GST should be worked out taking into account all stipulated taxes in force before GST implementation i.e., Excise duty, VAT including VAT on Excise duty, Entry tax, Octroi duty, prevalent Service tax etc., irrespective of whether the same were actually paid by agency or not. 3.5 The rate reasonability and quan....
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....f GST i.e. excise duty, VAT, including VAT on excise duty, entry tax, octroi duty, prevalent service tax etc. irrespective of whether the same were paid by the agency or not for the On Account/FCC Bills 8.6 On receipt of the Account/Final contract certificate from the executive, the contractor shall submit the following documents (for the on Account/FCC to the Executive for the GST neutralization: a) The invoice (Bill) duly segregating the GST component from the gross amount of the work executed. This should contain details of GSTIN, TIN & STRN numbers- state-wise (if he is working in more than one State) along with the worksheet. b) A work sheet for the tax liabilities before GST and after-GST, including the list of items for which the Input Tax Credit (ITC) is available for the work. A sample copy of the work sheet is given in the Annexure-B for general guidance. The details given in this worksheet and calculations should be duly certified by Statutory/Tax Auditor auditing books of the contractor. This worksheet shall be submitted for each of the bills, which may have already been passed as per provision of para 15 of this JPO and also for all other bills being processed af....
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....GST = rs_____________ * Tax liability after GST =rs______________ * Difference =(+)/(-) rs________ The bill containing these details shall then be prepared as per the format given in Annexure 'B' and forwarded to the Finance for security and prior vetting. The contractors claim will then be submitted to the associate finance for passing of the Bill. The difference in the tax liability before the GST and after the GST shall be reimbursed to the contractor or recovered from the contractor as the case may be. 11. Recovery, if any, from the contractors may be regulated as per section 171 (1) of CGST Act, 2017, i.e., any reduction in the rate of tax on any supply of goods or services or the benefit of the Input Tax Credit shall be passed on to the recipient (Railways) by way of a commensurate reduction in the prices. The executive will review all the agreements to ensure that recovery is done, wherever due. The recovery shall be effected from the on account bills on hand and if no account bills are pending, the recovery shall be effected from the final bill/security deposit or any other dues." 28. It is germane to note that paragraph 4 of the JPO as above provides t....
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....nt certifying that no GST paid inputs have been used in the execution of the contract and, therefore, there was no input tax credit pertaining to this contract. Such facts are not in dispute. If that be so, then the writ-applicants are entitled to refund in terms of the order for the GST neutralization issued by the Ministry of Railways read with the JPO and the supplementary agreement. In fact, it appears that this was also determined by the respondents themselves by generating a pay order in favour of the writ-applicants. 31. The tenor of the impugned communication dated 13.5.2019 issued by the respondent no.2 would reveal that even after the generation of the pay order, the same has not been disbursed primarily on the basis that the writ-applicants have paid a much lower amount of tax through the electronic cash ledger. 32. It is unfortunate to note that the respondents have not been able to understand the basic scheme of the GST Act. The input tax credit is admissible under Section 16(1) of the GST Act of the tax paid on goods and services used in the course of the business. The input tax credit claimed by a taxable person gets credited into his electronic credit ledger. Such....
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....cerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 19. It is, therefore, that in Eicher Motors Ltd. v. Union ofIndia [(1999) 2 SCC 361 : (1999) 106 ELT 3] this Court said that a credit under the Modvat Scheme was 'as good as tax paid'." 34. Thus, the payment of tax by utilization of the tax credit is a valid mode of payment. The denial to release refund/ reimbursement on the ground that only part amount has been paid by the writ-applicants through the electronic cash ledger is not legally tenable. The entire amount of the output tax paid under the GST Act in relation to the contract i....