Facts of the Case

Palathra Telecom Infrastructure Private Limited, the petitioner, was a Government contractor engaged in execution of public works. The petitioner had executed the work of providing BM and BC to Theeradesam Road – Kanjirappally – Manimala – Kulathurmoozhy Road pursuant to Ext. P1 tender notice.

During execution of the contracted work, the petitioner purchased and utilised various articles and paid GST on such purchases. According to the petitioner, after completion and execution of the work, the bill was submitted for payment. However, while disbursing the amount payable under the contract, the GST component of ₹42,48,720 paid by the petitioner was not included.

The petitioner had submitted representations seeking reimbursement of the GST amount. The record included an earlier representation dated 28 November 2019, another representation dated 25 March 2020, and Ext. P8 representation dated 22 August 2022 before the competent authority demanding refund/reimbursement of the GST component paid by the petitioner.

In support of its demand, the petitioner specifically relied upon Clause 3.5 of Ext. P1 tender conditions.

As the claim remained pending before the appropriate authority, the petitioner approached the High Court of Kerala by filing WP(C) No. 31951 of 2022.

Issues Involved

  1. Whether the petitioner, being a Government contractor, was entitled to reimbursement/refund of the GST component of ₹42,48,720 paid on articles purchased and utilised for execution of the Government contract work.
  2. Whether the GST component paid by the petitioner ought to have been included while disbursing the contractual bill amount.
  3. Whether Clause 3.5 of the tender conditions supported the petitioner’s claim for reimbursement of the GST component.
  4. Whether the competent authority was required to decide the pending representation after considering all relevant aspects, applicable provisions and binding judicial precedents.
  5. Whether the High Court should itself adjudicate the petitioner’s substantive entitlement to GST reimbursement when the matter was already pending before the appropriate authority.

Petitioner’s Arguments

The petitioner contended that it had executed the Government contract work of providing BM and BC to Theeradesam Road – Kanjirappally – Manimala – Kulathurmoozhy Road pursuant to the tender notice issued by the Public Works Department.

It was submitted that, during execution of the work, the petitioner had paid GST on the articles purchased and utilised for completing the contracted work.

The petitioner asserted that despite submission of the bill, the GST component amounting to ₹42,48,720 was not included while the payable amount was disbursed.

The petitioner relied upon Clause 3.5 of Ext. P1 tender conditions in support of the claim for refund/reimbursement of the GST component.

The petitioner had submitted Ext. P8 representation demanding refund of the GST component and sought appropriate consideration and decision by the competent authority.

Respondents’ Arguments

The learned Government Pleader raised various contentions regarding the petitioner’s entitlement to refund/reimbursement of the GST component.

The respondents contested the petitioner’s claim concerning entitlement to reimbursement of GST. However, the judgment records that the matter was pending before the appropriate authority for consideration.

The High Court did not reproduce or finally adjudicate each of the competing contentions on merits. Instead, it recognised that the competent authority should take a reasoned decision after considering all relevant aspects, including applicable provisions and binding precedents.

Court Order / Findings

The High Court observed that various contentions had been raised by both the learned counsel for the petitioner and the learned Government Pleader regarding the petitioner’s entitlement to refund of the GST component.

However, since the matter was pending before the appropriate authority, the Court held that it was for that authority to take a reasoned decision in the matter.

The Court specifically directed that the decision should be taken after considering:

  • all relevant aspects of the matter;
  • the applicable provisions; and
  • the binding precedents.

Accordingly, the writ petition was disposed of with a direction to the 4th respondent, namely the Executive Engineer, Public Works Department, Roads Division, Kottayam, to consider Ext. P8 representation and pass a reasoned order thereon.

The competent authority was further directed to afford an opportunity of hearing to the petitioner or its authorised representative.

The petitioner was granted liberty to supplement its contentions by producing requisite materials, including binding precedents, if any, of the High Court.

The Court directed that the decision, in the manner specified in the judgment, be taken within four weeks.

Important Clarification

The High Court did not finally hold that the petitioner was substantively entitled to reimbursement or refund of ₹42,48,720 towards the GST component.

The Court also did not direct automatic payment of the disputed GST amount.

The operative relief was limited to directing the competent authority to consider Ext. P8 representation and pass a reasoned order after:

  • considering all relevant aspects;
  • examining the applicable provisions;
  • considering binding precedents;
  • granting an opportunity of hearing to the petitioner or its authorised representative; and
  • permitting the petitioner to produce requisite supporting materials and binding precedents, if any.

Therefore, this judgment should be understood as a direction for proper, reasoned and time-bound administrative adjudication of the GST reimbursement claim, rather than a final judicial declaration granting the GST refund itself.

Sections Involved

·         Clause 3.5 of Ext. P1 Tender Conditions: Specifically relied upon by the petitioner in support of the demand for reimbursement/refund of the GST component.

·         Applicable GST Provisions: The judgment does not identify or adjudicate any specific section of the Central Goods and Services Tax Act, 2017 or the Kerala State Goods and Services Tax Act, 2017. Instead, the High Court directed the competent authority to consider the applicable provisions while deciding the representation.

·         Binding Judicial Precedents: The competent authority was expressly required to consider binding precedents. The petitioner was also granted liberty to produce requisite materials, including binding precedents, if any, of the High Court.

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1783406587_1194compressed.pdf

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