Kashish Developers Limited vs. The State Of Bihar

Held

The Patna High Court, while not expressing any opinion on the merits of the case, disposed of the writ petition with specific directions. The Court directed the parties to appear before the Joint Commissioner, State Tax, Patna Central Circle, Patna, on November 17, 2021. The Joint Commissioner was mandated to take a decision within eight weeks from the date of appearance, after affording adequate opportunity of hearing to all concerned parties, including the writ petitioner, to place on record essential documents and materials. The respondent was to pass a speaking order assigning reasons. Liberty was reserved for the petitioner to challenge the order if necessary, and for parties to pursue other remedies. The Court noted that if any amount was found due to the petitioner, it should be refunded in accordance with Chapter -11 of the Value Added Tax Act, 2005, and if an amount was found payable by the petitioner, it should be paid within two months thereafter. All issues were left open for decision by the Joint Commissioner.

Facts

Kashish Developers Limited (the petitioner) filed a writ petition before the Patna High Court seeking directions to the respondent authorities to pay the difference in tax paid after the implementation of the Goods and Services Tax (GST) Act, 2017. The petitioner had entered into an agreement for works contract on June 9, 2015, when the Value Added Tax (VAT) Act, 2005, was in force. Under the VAT regime, the petitioner received Rs. 97,88,217/- in taxes. However, after the GST implementation on July 1, 2017, the petitioner was compelled to pay GST amounting to Rs. 1,53,26,779/-, resulting in an alleged excess payment of Rs. 55,38,562.25/- for the financial year 2017-18. The petitioner sought this excess amount from the respondent authorities.

Key Issues

1. Whether the petitioner is entitled to a refund of the excess tax paid due to the transition from VAT to GST for a works contract executed prior to the GST regime? (Question of law) Petitioner's contention: The petitioner argued that since the agreement was executed in 2015 under the VAT Act, 2005, they should not be burdened with the higher GST liability. They relied on File No. NRRDA-GO (17)32017-FA dated 06-06-2018 issued by the National Rural Infrastructure Development Agency, Ministry of Rural Development, Government of India, which they believed supported their claim for the difference in tax. They contended that the excess amount paid as GST, Rs. 55,38,562.25/-, should be refunded. Revenue's contention: The judgment does not record any specific arguments from the revenue or state respondents regarding their defense against the petitioner's claim. However, the parties jointly prayed for the petition to be disposed of with directions to the Joint Commissioner, State Tax, Patna Central Circle, Patna, to pass an appropriate order.