M/S Vedic Projects PVT. LTD. Thru Dir. Gaurav Chaudhary vs. State Of U.P. Thru Prin. Secy. Irri. And Water Resources And Ors

Facts

M/s Vedic Projects Pvt. Ltd. (the petitioner) filed a writ petition challenging an order dated 02.04.2019 passed by the Superintending Engineer, Anusandhan Evam Niyojan (Barh) Mandal, Lucknow, and a sub-paragraph of a Government Order dated 08.11.2017. The petitioner, a civil construction service provider, executed flood protection works for the State of Uttar Pradesh. Some work was completed before the Goods and Services Tax (GST) Act, 2017, and some after its enactment on 01.07.2017. The petitioner claimed to have deposited Rs. 43,20,988/- as GST and sought its refund, along with market rate interest, from the respondents. The petitioner also challenged the formula for calculating refunds introduced by the Government Order, arguing it contravened the GST Act.

Held

The Court held that the writ petition was devoid of merits and dismissed it. Regarding the refund claim, the Court noted that if there was any dispute regarding the refund amount, the petitioner could approach the arbitrator as per Clause 34 of the agreement. The Court acknowledged that the State had admitted an amount of Rs. 26,12,649/- in its counter-affidavit, and the petitioner could pursue arbitration for any disputed amount beyond this admitted sum. Concerning the challenge to the Government Order dated 08.11.2017, the Court observed that the petitioner had not pleaded in the writ petition or the prayer clause which specific provision of the GST Act, 2017, was contravened by the said paragraph. While the petitioner's counsel relied on Section 142(10) of the Act during arguments, the Court found that this section does not provide any mode of calculation or formula for determining liability. The Court concluded that nothing was pleaded or argued to demonstrate that the formula introduced by the Government Order violated Section 142(10) or was arbitrary and unreasonable. Therefore, the challenge to the Government Order was not substantiated.

Key Issues

1. Whether the impugned order dated 02.04.2019, rejecting the petitioner's claim for refund of Rs. 43,20,988/- as GST, is legally sustainable? (Question of law) 2. Whether sub-para 2 of paragraph 2 of the Government Order dated 08.11.2017, which introduces a formula for calculating refunds with a rate of VAT (Rv-Rg) and (Q) x (Rv-Rg) / Rv, is in contravention of the provisions of the Goods and Services Tax Act, 2017? (Question of mixed law and fact) Petitioner's arguments: The petitioner contended that the respondents, as recipients of services, were liable to pay GST on a reverse charge basis. They argued that the impugned order rejecting the refund of admitted GST deposit was illegal and passed without considering GST laws and the Government Order. They also argued that the formula in the Government Order was in contravention of Section 142(10) of the GST Act, 2017, which states that goods or services supplied in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the Act. Revenue's arguments: The State counsel argued that the amount claimed by the petitioner was disputed. They stated that after calculation based on the Government Order dated 08.11.2017, the determined refund amount was Rs. 26,12,649/-, and budget allocation for this was in progress. They further argued that for disputed amounts, the petitioner had a remedy under Clause 34 of the agreement, which provides for arbitration, and therefore, the writ petition was not maintainable for the disputed amount.