Bandi Subba Reddy vs. Assistant Commissioner

Held

The Court held that the rate of tax on the contracts in question is indeed 18%, as previously decided in W.P. No. 22663 of 2023. The Court further affirmed that M/s. APIIC is liable to reimburse M/s. Sri Venkateswara Constructions for the differential tax. However, the judgment notes a dispute regarding the exact differential amount reimbursed by APIIC to M/s. Sri Venkateswara Constructions. The Court found that the petitioner in W.P.Nos. 21869 & 22017 of 2025 is entitled to the same consideration as M/s. Sri Venkateswara Constructions. Therefore, M/s. Sri Venkateswara Constructions is directed to reimburse the petitioner in W.P.Nos. 21869 & 22017 of 2025 the differential amount of Rs. 63,88,598/- within six weeks. The petitioner in these writ petitions will not be absolved of their liability to pay the tax to the GST authorities. Regarding the claim for a refund of Rs. 75,32,170/- by M/s. Sri Venkateswara Constructions, the Court stated this issue cannot be decided in the present writ petition and permitted M/s. Sri Venkateswara Constructions to raise this question before the appropriate forum for reconciliation and refund of any excess payment under Section 54 of the GST Act. The dispute between APIIC and M/s. Sri Venkateswara Constructions regarding a reimbursement of approximately Rs. 28,00,000/- was left open for resolution before the appropriate forum.

Facts

The petitioner, M/s. Sri Venkateswara Constructions, is a contractor who executed sub-contracts for M/s. Andhra Pradesh Industrial Infrastructure Corporation (APIIC) during the years 2021-22 and 2022-23. The GST authorities raised demands on the petitioner, asserting that the applicable GST rate was 18% instead of the 12% initially paid. The petitioner contends that the rate should be 12% or, alternatively, that the differential amount should be reimbursed by the main contractor, M/s. Sri Venkateswara Constructions, and subsequently remitted to the department. A related writ petition filed by M/s. Sri Venkateswara Constructions had previously established the 18% GST rate but directed APIIC to reimburse the differential tax to M/s. Sri Venkateswara Constructions. APIIC reimbursed a portion, but a dispute remains over the exact differential amount. The petitioner in the current writ petitions claims they were reimbursed only 12% by M/s. Sri Venkateswara Constructions and are owed the differential 6%. The first respondent initiated recovery proceedings against the petitioner, including debiting their cash and credit ledgers and issuing a third-party notice to their bank.

Key Issues

1. Whether the action of the First Respondent in recovering Rs. 75,32,139/- from the petitioner's cash and credit ledgers and issuing a third-party notice under Section 79(1)(c) of the GST Act, 2017, for recovery of Rs. 1,35,12,360/- is illegal and violative of this Court's previous order dated 24-07-2024 in W.P. No. 22663 of 2023, which directed the Fourth Respondent (APIIC) to reimburse the differential tax to M/s. Sri Venkateswara Constructions. Petitioner's arguments: The recovery action is contrary to the previous court order, which placed the reimbursement liability on APIIC. The petitioner argues they are entitled to the same benefit as M/s. Sri Venkateswara Constructions and should be reimbursed the differential amount by M/s. Sri Venkateswara Constructions. They also seek a refund of the amount recovered from their ledgers. Revenue/State's arguments: Not recorded in the judgment.