Case Law Details
Maa Vindhya Vasini Constructions V. Sujit Kumar C.E.O (Allahabad High Court)
The grievance of the applicant company is that despite deposit of GST from its own source, opposite parties failed to refund the applicant the tax component. Aggrieved, applicant approached this Court by filing a writ petition which came to be disposed of vide order dated 12 September 2019.
It is not disputed that the tax liability has been deposited by the company but the company has not been reimbursed the sum due from the opposite party no. 2 despite the funds being released by the opposite party no. 1
Learned counsel for the opposite party no. 1 submits that the Nodal Agency, Chief Executive Officer, U.P. Rural Road Development Authority (RRDA), had twice reimbursed the tax component, however, it has not been released by the opposite party no. 2. The matter is serious and calls for attention of the highest officer of the State. Accordingly, the Principal Secretary, Public Works Department, U.P. Lucknow, shall summon the officers and get the matter settled. It is expected that the meeting of the respondent officials (1 and 2) shall be convened forthwith and the matter be settled.
It is provided that in the event the Principal Secretary is of the opinion that the opposite party no. 2, Sri Niraj Singh, Executive Engineer, Construction Division-II, Hardoi, has been unnecessarily harassing and creating impediment in releasing the amount, it will be open for the Principal Secretary to initiate proceedings including the disciplinary proceedings against the opposite party no. 2. Affidavit of compliance to be filed on the date fixed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Perused the compliance affidavit filed on behalf of opposite party nos. 1 and 2. It is not in dispute that the petitioner-company has paid the entire G.S.T. required under law.
The applicant-company was awarded a contract by the Public Works Department, Construction Division-II, Hardoi and Shahjahanpur (PWD), as well as, Rural Engineering Department, Farrukhabad (R.E.D.), under the Pradhan Mantri Gram Sadak Yojana (PMGSY) to execute the work of civil construction of road and maintenance thereof. The contract was awarded before enactment of Goods and Services Tax Act, 2017 (GST Act) on 1 July 2017. Before the enactment of GST Act, the tax was levied at source at 4% of contract value under the Value Added Tax Act, 2008 (VAT Act). After the enactment of GST Act, the indirect tax was subsumed in the GST and the rate was revised at 12% of the contract value. The GST Act provides that every registered company/firm is entitled to Input Tax Credit (ITC) on purchase of goods and services which can be set off against the tax liability on the sale of goods and service. The applicant-company under the GST Act regime was responsible to pay GST after setting off ITC by paying amount equivalent to 12% of the value of work/contract. In the event of delay, interest at 18% was to be levied towards penalty.
It is submitted that GST was not envisaged in the agreement entered between the contractors and P.W.D. and R.E.D. Accordingly, Government of U.P. issued guidelines on 8 November 2017, for reimbursement of the GST to the contractor in relation to the on going contracts having regard to change in tax structure regime. The contractor would, however, have to deposit the GST at 12% of the value of the work. Similarly, the National Rural Infrastructure Development Agency, Ministry of Rural Development, Government of India (NRIDA) issued guidelines on 6 June 2018 providing for refund of the increased amount of tax. The guidelines, inter alia, provides that the assessment of the subsumed tax shall be submitted by the contractor along with copies of invoices and statement of input taxes duly certified by the Chartered Accountant. The guideline further provides that the ITC would be carried forward and the entire GST will be borne by the employer. Thereafter, the contractor would be liable to pay the GST on the value of the work by utilizing the ITC.
It is submitted that the applicant-company entered into the contract prior to 30 June 2017 and partly thereafter, consequently, the opposite parties disbursed the pre-GST amount on the value of the work after deducting 4% VAT at source, however, post GST, the opposite party disbursed the amount on the value of the remaining work without deducting 4% VAT.
In this backdrop, it is submitted that applicant applied for reimbursement of the additional tax equivalent to 8% on the value of remaining work for the increased tax component (GST at 12%) but the opposite parties delayed the reimbursement of the additional tax, consequently, applicant was left with no option but to deposit 12% GST including additional tax at 8% on the value of the work after setting off ITC to the State Government in order to avoid penal interest under the GST Act.
The grievance of the applicant company is that despite deposit of GST from its own source, opposite parties failed to refund the applicant the tax component. Aggrieved, applicant approached this Court by filing a writ petition which came to be disposed of vide order dated 12 September 2019. The operative portion of the order reads thus:
“….3. Learned Additional Chief Standing Counsel on the basis of instructions received stated that due amount of GST shall be refunded to petitioner within a month.
4. In view of above stand, we dispose of writ petition in the light of aforesaid statement directing respondent-competent authority to take steps for refund of admissible amount of GST to petitioner within a month.
5. Writ petition is accordingly disposed of.”
Opposite party Nos. 1 and 2 have put in appearance and filed compliance affidavit. The stand of the opposite party no. 1, Chief Executive Officer, U.P. Rural Road Development Authority, Lucknow, is that they have released the tax component to the opposite party no. 2, Executive Engineer, Construction Division-II, Hardoi, but it appears that the opposite party no. 2 is sitting over the matter and avoiding the compliance on one pretext or the other by raising hyper technical objections in not crediting the amount (tax component) to the applicant-company. The tax component has not been disputed by the opposite party no. 2.
Learned counsel for the applicant-company, at this stage, has no grievance with opposite party nos. 3 and 4 as they have already credited the tax component due to the applicant.
It is submitted that the applicant-company is entitled to Rs. 39 lakh. The approach adopted by the opposite party no. 2 in withholding the amount and not crediting the tax component with the applicant/company after receiving the amount from the opposite party no. 1, is not conducive for the company to work without the requisite capital.
It is not disputed that the tax liability has been deposited by the company but the company has not been reimbursed the sum due from the opposite party no. 2 despite the funds being released by the opposite party no. 1
Learned counsel for the opposite party no. 1 submits that the Nodal Agency, Chief Executive Officer, U.P. Rural Road Development Authority, had twice reimbursed the tax component, however, it has not been released by the opposite party no. 2. The matter is serious and calls for attention of the highest officer of the State. Accordingly, the Principal Secretary, Public Works Department, U.P. Lucknow, shall summon the officers and get the matter settled. It is expected that the meeting of the respondent officials (1 and 2) shall be convened forthwith and the matter be settled.
It is provided that in the event the Principal Secretary is of the opinion that the opposite party no. 2, Sri Niraj Singh, Executive Engineer, Construction Division-II, Hardoi, has been unnecessarily harassing and creating impediment in releasing the amount, it will be open for the Principal Secretary to initiate proceedings including the disciplinary proceedings against the opposite party no. 2. Affidavit of compliance to be filed on the date fixed.
List on 18.02.2021.
In the event of non-compliance, opposite party no. 2 shall appear for framing of charge.
Copy of this order shall be supplied by learned Standing Counsel to the Principal Secretary for compliance.
