Larsen and Tourbo Limited Vs Deputy Commissioner (ST)-II (Madras High Court)
The Madras High Court in Larsen and Toubro Ltd. v. Deputy Commissioner (ST)-II held that pre-deposit made under the VAT regime through input tax credit (ITC) must be refunded in cash after the introduction of GST, in accordance with Section 142(6) of the CGST Act. The petitioner had deposited 10% of the disputed tax using ITC during litigation, and later succeeded when the issue of including freight and pumping charges in taxable value was decided in its favour. Despite issuance of refund orders, the department denied cash refund relying on a circular that allowed only adjustment. The Court ruled that statutory provisions override departmental circulars and that, post-GST, VAT ITC cannot be carried forward or adjusted. It further held that once the tax demand is dropped, refund becomes mandatory. Accordingly, the Court quashed the department’s refusal and directed refund within 30 days, reinforcing taxpayer rights in GST transitional provisions.
Facts
Larsen and Toubro Ltd. (‘the Petitioner’) is a Ready Mix Concrete (RMC) who collected freight and pumping charges from clients separately and treated them as post-sale expenses that are not part of taxable value.
The GST Department (‘the Respondent’), initially accepted this treatment but later issued revision orders that included these charges in taxable value and demanded tax.
