Ms Esl Steel Limited Through Its Deputy General Manager Accounts Rajesh Kumar Pandey vs. Ms Bharat Heavy Electricals Limited

Held

The Court noted that during the pendency of the writ petition, significant developments had occurred. The competent authority under CGST, vide a letter dated 6th October 2022, had granted an extension of the time limit for export under LUT in terms of Rule 96A(1)(a) of CGST Rules, 2017, for the delay caused in exports under seven specific Export Invoices. The Court observed that this extension addressed the core issue of the Petitioner's tax liability, which had arisen due to the delay in export within the specified time under Notification No. 41/2017-Integrated Tax (Rate). Since the extension was granted, the Petitioner's grievances before the Court no longer survived. The Court held that it was now for the Petitioner to approach its jurisdictional GST authority for a refund of the tax already deposited and/or its reversal. The Court explicitly stated that it was not required to comment on the Petitioner's claim for refund or reversal, as that was to be decided by the concerned jurisdictional GST Authority. The writ petition was disposed of in light of the decision taken by the competent authority.

Facts

M/s. ESL Steel Limited (Petitioner) filed a writ petition challenging the denial by M/s. Bharat Heavy Electricals Limited (Respondent No. 1) to compensate the Petitioner for additional IGST liability demanded by the Superintendent (Preventive), CGST & Central Excise, Ranchi (Respondent No. 2). The Petitioner sought directions for Respondent No. 1 to pay Rs. 13,26,49,589/- towards IGST, interest, and penalty. The Petitioner also sought to quash demand notices issued by Respondent No. 2 and a refund of Rs. 11,27,29,864/- paid as IGST. The dispute arose from delays in export by Respondent No. 1, which impacted the Petitioner's eligibility for a concessional IGST rate under Notification No. 41/2017-Integrated Tax (Rate). The Petitioner argued that Respondent No. 1, a state entity, was responsible for export timelines and GST compensation as per tender terms.

Key Issues

1. Whether the denial by Respondent No. 1 to compensate the Petitioner for the additional IGST liability demanded by Respondent No. 2 is arbitrary, unreasonable, and violative of constitutional provisions (Article 14, 19(1)(g), 300A) and the terms of the Tender and Purchase Order dated 03.01.2019 and 16.01.2019 respectively? 2. Whether the demand notices issued by Respondent No. 2 are arbitrary, unreasonable, violative of Sections 73 and 74 of the CGST Act, and principles of natural justice? 3. Whether the Petitioner is entitled to a refund of Rs. 11,27,29,864/- paid as IGST? Petitioner's Arguments: The Petitioner contended that Respondent No. 1, being a state entity and bound by the tender terms, was responsible for ensuring timely exports and compensating the Petitioner for any additional tax liability arising from delays. They relied on Clause 14.1.2 of the tender, which stated BHEL would pay legally leviable GST. The Petitioner also argued that their request for extension of time for export, based on Circular No. 37/11/2018-GST, remained unresponded, leading to the demand for differential tax. They further argued that the demand notices were issued without adhering to due process and principles of natural justice. Revenue/State's Arguments: Respondent No. 2 (CGST) argued that the Petitioner's grievances were primarily against Respondent No. 1. Respondent No. 1 appeared later and submitted that the competent authority had granted an extension of time for export under Rule 96A(1)(a) of CGST Rules, 2017, for certain export invoices.