Case Law Details
Bhagwati Construction Vs Union of India (Gujarat High Court)
No denial of refund of GST in case payment of tax made through electronic credit ledger instead of electronic cash ledger.
Conclusion: The utilization of the input tax credit from the electronic credit ledger was only a mode of payment of the output tax and was a homogeneous pool of credit which could not be vivisected. Refund could not be denied only on the ground that only a part amount of the tax was paid through the electronic cash ledger as Respondents had failed to understand the distinction between the availment and the utilization of the input tax credit.
Held: In the instant case, Deputy Chief Engineer wrote a letter to assessee 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 assessee had discharged tax liability in the returns by utilizing the input tax credit. Assessee clarified 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. Assessee had received the letter from the Deputy Engineer informing them that they would not be granted reimbursement of the GST amount since only a part amount of the tax was paid through the electronic cash ledger. It was held that the payment of tax by utilization of the tax credit was a valid mode of payment. The entire amount of the output tax paid under the GST Act in relation to the contract in respect of which the supplementary agreement had been entered into with the writ-applicants need to be forthwith released irrespective of the fact, whether such amount had been paid through electronic cash ledger or through electronic credit ledger. There was a difference between availment of the input tax credit and the utilization of the input tax credit. Insofar as the passing of the benefit of the input tax credit was concerned, the input tax credit factually availed qua the contract was to be calculated. This was clear from the terms of the order of the Ministry of Railways as well as the JPO. However, insofar as the utilization of the input tax credit from the electronic credit ledger was concerned, the same was only a mode of payment of the output tax. For the purpose of payment of tax, the electronic credit ledger was a homogeneous pool of credit which could not be vivisected. It appeared that the respondents had not been able to understand this distinction between the availment and the utilization of the input tax credit which had led to the present controversy. The non-payment of refund to the writ-applicants was contrary to the order of the Ministry of Railways read with the JPO and the supplementary agreement and the same ought to be forthwith released. The denial of refund/reimbursement of the GST was hereby quashed and set-aside.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
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