U B V Infrastructures LTD. vs. The State Of Bihar And Ors

Facts

The petitioner, U B V Infrastructures Ltd., entered into an agreement dated June 23, 2016, with the Executive Engineer, Sone Barrage Division (Respondent No. 3). The petitioner sought a writ directing Respondent No. 3 to pay the balance GST at 7% (3.5% CGST and 3.5% BGST) on R.A. bills issued from July 1, 2017, onwards, as per the agreement. The petitioner also sought to restrain Respondent No. 5 (Deputy/Assistant Commissioner of State Tax) from demanding this balance GST or taking action. The petitioner's grievance was the non-payment of the tax component by the State instrumentality, despite the petitioner being liable to pay the tax under the CGST Act. The petitioner expressed apprehension about the authorities' compliance in expediting the refund of the tax component payable to them.

Held

The Court disposed of the writ petition with specific directions. It acknowledged that the petitioner is liable to pay tax under the CGST Act, but is aggrieved by the non-payment of the tax component by the State instrumentality as per their agreement. The Court noted the petitioner's apprehension regarding the expediting of refunds. However, it found no record of inaction by the authorities in processing refund applications. The Court directed the petitioner to initiate a refund proceeding before the concerned authority within two weeks. This application must be processed and decided within four weeks thereafter or the statutory period. Officials found negligent in taking action would be held personally responsible. Liberty was reserved for the petitioner to file a fresh petition in case of inaction. Additionally, any amount deposited by the petitioner was to be processed along with the refund application. The core issue of whether the respondent No. 3 was obligated to pay the balance GST directly to the petitioner was implicitly addressed by directing the petitioner to seek a refund, suggesting the mechanism for recovering the tax component would be through the refund process.

Key Issues

1. Whether the Court should issue a writ directing Respondent No. 3 to pay the balance GST @ 7% on R.A. bills issued from July 1, 2017, onwards, as per the agreement dated June 23, 2016, and restrain Respondent No. 5 from demanding this balance GST or taking action against the petitioner? (Question of law and fact, concerning contractual obligations and GST provisions). Petitioner's Argument: The petitioner argued that the respondent authorities should be directed to pay the balance GST component as per the agreement and that Respondent No. 5 should be restrained from demanding this amount. The petitioner was aggrieved by the non-payment of the tax component by the State instrumentality and feared non-compliance by authorities in expediting refunds. Revenue/State's Argument: The judgment records no specific argument from the revenue or state respondents regarding the petitioner's prayer for payment of balance GST or restraint on demand. The court noted that there was nothing on record to suggest any inaction by the authorities in processing refund applications.