M/S. Sri Laxmi Venkatramana Constructions vs. The Assistant Commissioner (St)

Held

The Court noted the arguments presented by both sides. The petitioner, after some arguments, sought permission to withdraw the writ petition to pursue the appellate remedy against the order-in-original dated March 16, 2026, with the statutory pre-deposit and a delay condonation application if necessary. The petitioner also sought liberty to pursue the cause of action relating to the non-reimbursement of the differential tax rate under the GST regime in an independent proceeding. The Court allowed both liberties as prayed for. The petitioner was granted permission to prefer an appeal within two weeks with statutory pre-deposit and a delay condonation application. The appellate authority was directed to consider the question of delay, taking into account the facts and circumstances, and if satisfied, proceed to decide the appeal on merits. The writ petition was disposed of with these directions.

Facts

The petitioner, M/s. Sri Laxmi Venkatramana Constructions, filed a writ petition challenging an assessment order and summary of order in Form GST DRC-07, dated March 16, 2026, passed by the Deputy Commissioner (ST) under Section 74 of the TGST Act/CGST Act for the tax period 2017-18. The dispute arose from the non-reimbursement of the differential rate of GST on existing contracts that were under the VAT regime. The petitioner sought to set aside the demand of tax, interest, and penalty and also prayed for the remittance of the GST component from July 1, 2017, to March 2018 by the respondent government departments. The respondents, including the Assistant Commissioner (ST) and the Deputy Commissioner (ST), argued that contractual arrangements for GST reimbursement are outside the purview of GST adjudication and do not affect statutory liability.

Key Issues

1. Whether the demand of tax, interest, and penalty arising from the assessment order passed under Section 74 of the TGST Act/CGST Act for the tax period 2017-18 is valid, considering the petitioner's claim for non-reimbursement of the differential GST component on existing contracts. 2. Whether the respondent government departments should be directed to remit the component of GST for the period July 1, 2017, to March 2018, in respect of contracts executed by the petitioner. Petitioner's arguments: The petitioner contended that the imposition of GST liability was unnecessary due to the non-reimbursement of the differential tax rate on contracts existing prior to the GST regime. They sought to set aside the adjudication order and have the GST component remitted. Revenue's arguments: The revenue argued that contractual arrangements regarding GST reimbursement are separate from and outside the scope of GST adjudication proceedings. They contended that such disputes do not impact the statutory liability under the TGST Act/CGST Act and that the petitioner should pursue an appeal against the adjudication order and a separate cause of action for reimbursement.