Continental Engineering Corporation vs. Union Of INDIA

CW/8487/2020HC RajasthanGSTCNR RJHC02044773202025 February 2025Bench: AVNEESH JHINGAN,PRAMIL KUMAR MATHUR3 pages

AI SummaryRemanded

Facts

The petitioner, Continental Engineering Corporation, a Taiwanese company with an Indian project office in Jaipur, was awarded a tender for the construction of tunnels for the Jaipur Metro Rail. The work was exempted from VAT and Service Tax prior to the implementation of GST. Following the introduction of GST, the tender terms necessitated a re-negotiation of prices due to the change in the taxation regime. This process, involving a foreign collaborator, took time, and the petitioner could not furnish details of credit notes until after the filing of returns for the relevant period. The petitioner's application for a refund of Rs. 77,36,099/-, arising from these credit notes, was not considered by the department, which cited system limitations preventing the acceptance of the application.

Held

The Court noted that the petitioner's application for refund was not even entertained by the department. Therefore, at this stage, there was no ground to delve into the vires of Section 34(2) of the CGST and RGST Acts. The respondents, on instructions, submitted that as the matter pertained to the transitional period and the application was not accepted by the system, it would be entertained manually and considered in accordance with law. Taking into account the peculiar facts and circumstances, the petition was disposed of with a direction for the petitioner to file an application with the respondent concerned within four weeks. This application was to be considered in accordance with law after providing an opportunity of hearing to the petitioner. The petitioner was also granted liberty to avail further remedies if their grievance persisted. No issue was expressly left undecided, as the primary issue of refund application processing was addressed.

Key Issues

1. Whether Section 34(2) of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Rajasthan Goods and Services Tax Act, 2017 (RGST Act) are ultra vires the Constitution. Petitioner's contention: The petitioner challenged the vires of Section 34(2) of the CGST and RGST Acts. Revenue's contention: The respondents did not argue on the vires of Section 34(2) of the CGST and RGST Acts. Instead, they submitted that the application for refund was not accepted by the system due to the transitional period and assured that the application would be entertained manually and considered in accordance with law.

Sections Cited

Section 34(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

[2025:RJ-JP:8427-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 8487/2020 Continental Engineering Corporation, A Company Incorporated Under The Laws Of Taiwan, Having Indian Project Office Near Jalewi Chowk, In Front Of City Palace, Near FRO Office, Badi Chauper, Jaipur Rajasthan - 302 002 Duly Represented By Mr. Rajiv Kumar, S/o Ram Saran Das, Aged About 52 Years Authorized Signatory Of The Petitioner Company. ----Petitioner Versus 1. Union Of India, Through Its Secretary Revenue, Room No. 46, North Block New Delhi-110 001 2. State Of Rajasthan, Through Its Secretary Finance (Revenue), 1st Floor, Main Building, Government Secretariat, Jaipur-302 005. 3. Goods And Service Tax Council, Through Its Ex - Officio Secretary, Jeevan Bharti Building, Janpath Road, Connaught Place, New Delhi-110 001. 4. The Commissioner Of Central Goods And Service Tax, Central GST Commissionerate, NCR Building, Statute Circle, Scheme C, Jaipur, Rajasthan-302 005. 5. The Commissioner Of State Goods And Service Tax, Kar Bhawan, Bhawani Singh Road, Ambedkar Circle, C- Scheme, Jaipur, Rajasthan-302 005. 6. Jaipur Metro Rail Corporation, Through Chairman And Managing Director Having Its Registered Office At Admin Building, Metro Depot, Bhrigu Path, Mansarovar, Jaipur- 302020. ----Respondents For Petitioner(s) : Mr. Anant Kasliwal, Sr. Adv. with Mr. Raghav Krishnatri Mr. Sandeep Chilania (through V.C.) For Respondent(s) : Mr. Anand Sharma with Ms. Vaibhav Bhansali Mr. Rajat Sharma for Mr. R.D Rastogi, ASG Mr. Sandeep Taneja, AAG Mr. Sandeep Pathak [2025:RJ-JP:8427-DB] (2 of 3) [CW-8487/2020] Mr. Kartik Seth through VC HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE PRAMIL KUMAR MATHUR

Order 25/02/2025

This petition is filed challenging the vires of Section 34(2) of the Central Goods and Services Tax, 2017 (for short ‘CGST Act’) and Rajasthan Goods and Services Tax, 2017 (for short ‘RGST Act’). The directions are sought for refund of amount of Rs. 77,36,099/-, accruing consequent to credit notes issued after negotiation of prices necessitated with the change of taxation regime in the country.

The bird eye view of the facts relevant to the controversy are that the petitioner was allotted tender for construction of tunnels of Jaipur Metro Rail. The work being executed was exempted under the Rajasthan Value Added Tax, 2003 as well as from the Service Tax. The exemption ended with the implementation of GST and consequently in view of the terms and conditions of the tender, the price was required to be re-negotiated. The Foreign Collaborator was involved and negotiation took time. The details of the credit notes could not be furnished till filing of the returns for the relevant assessment year.

The application filed by the petitioner for refund of the due amount was not considered stating that system of the department is not accepting the application.

The application for refund was not even entertained, at this stage there is no ground to go into the vires of Section 34(2) of CGST and RGST.

[2025:RJ-JP:8427-DB] (3 of 3) [CW-8487/2020]

Learned counsel for the respondents on instructions submits that as the matter pertains to transitional period and the application was not accepted by the system, therefore the application shall be entertained manually and considered in accordance with law.

Taking into account, the peculiar facts and circumstances of the case, the petition is disposed of with the direction that the petitioner shall file an application with the respondent concerned within four weeks and the same shall be considered in accordance with law, after providing an opportunity of hearing to the petitioner.

Needless to say, the petitioner shall be at liberty to avail remedies in accordance with law, in case, grievance still survives.

All pending application(s) stands disposed of. (PRAMIL KUMAR MATHUR),J (AVNEESH JHINGAN),J Sunita/22 whether Reportable: Yes/No

Reproduced from the public record of the Rajasthan High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.