KVAT: Once money received by State Government, credit has to be given to petitioner

KEC International Ltd. Vs State of Kerala (Kerala High Court)

The Hon’ble High Court held that once the money has been received by the State Government, credit has to be given to the petitioner. It is for the KSEB to clarify how the payment was made to the State Government and the petitioner cannot be put to peril

The petitioner is a works contractor. It was awarded work by Kerala State Electricity Board (KSEB). KSEB deducted works contract TDS under Section 10 of Kerala VAT Act. KSEB remitted the said sum to the State Tax department. However, TIN of the petitioner was not reflected on the Kerala Value Added Tax Information System (KVATIS) portal and, as such, no credit was allowed to the petitioner. The demand was confirmed against the petitioner. This was challenged by way of writ petition.

The Hon’ble High Court held that once the money has been received by the State Government, credit has to be given to the petitioner. It is for the KSEB to clarify how the payment was made to the State Government and the petitioner cannot be put to peril. Accordingly, issues interim direction that KSEB would clarify the payment with the State Tax officer and the State Tax officer would give credit to the petitioner in one week thereafter.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The writ petition has been filed praying to quash Ext.P2 and for direction to the 2nd respondent to allow the credit of Rs.78,52,574/- paid by the 4th respondent on behalf of the petitioner under Section 10(1) of the KVAT Act.

2. The petitioner had undertaken works on behalf of the Kerala State Electricity Board and payments had been received after deducting the sum of Rs.79,53,497/-.

3. The Electricity Board, which is represented by the 4th respondent, Deputy Chief Engineer in this writ petition had remitted the amount to the Government and issued Ext.P6 to the petitioner which shows that the amount had been remitted vide cheque dated 09.04.2015.

4. The case of the petitioner is that, even though the amount has been received by the Government, the petitioner is not given the credit of the tax already paid. The 2nd respondent has filed a counter affidavit in which, it is stated that the 4th respondent has not given specification in their reply that the amount deducted is remitted in favour of the petitioner or their office at Mumbai.

5. When the case was taken up earlier, this Court had directed the Government Pleader to get specific instruction as to whether the amount has come into the coffers of the State. When the case is taken up today, it is submitted that the amount has been received by the State. In such circumstances, the petitioner cannot be put to peril. The petitioner necessarily has to get the benefit of credit of the tax which has already been paid. Since the awarder is the 4th respondent, it is for them to clarify the fact of the remittance to the State in order to put the records straight. There will hence be an interim order directing the 4th respondent to address the State regarding the manner in which they had remitted the payments to the petitioner, deducted the amount and remitted the same to the Government. Such communication shall be issued within ten days from today. On receipt of the communication, the 2nd respondent shall immediately take steps to give credit of such amount to the petitioner within a week from the receipt of the clarification from the 4 th respondent.

Hand over.

Post the writ petition on 13.03.2023.