Facts of the Case

The petitioner, a Joint Venture of SIBMOST-TATA Projects Limited engaged in infrastructure development and registered under GSTIN 37AA0AS5529H1ZZ, was awarded works for Rehabilitation and Upgradation of NH214A for a contract price of Rs. 676.51 crores, inclusive of taxes. Tax was deducted at source by the contractee under Section 51 of the AP GST Act, 2017 and credited to the petitioner's electronic cash ledger. The petitioner sought a refund of the balance lying unutilised in the ledger, on the ground that it exceeded its output tax liability. By order dated 29.08.2020, the second respondent rejected the refund claim, holding that the TDS amount was a “tax” component and that on comparing GSTR-3B with GSTR-2A a discrepancy existed, so the assessee could not claim refund of the cash-ledger balance as sought. The petitioner approached the Andhra Pradesh High Court under Article 226 seeking a writ of Mandamus declaring the rejection order illegal, void and violative of Articles 14 and 19 of the Constitution.

Issues Involved

  1. Whether the excess GST TDS amount lying unutilised in the petitioner's electronic cash ledger was refundable under Section 54 of the CGST Act.
  2. Whether the rejection order, passed before issuance of a subsequent clarificatory CBIC circular, required reconsideration.

Petitioner's Arguments

  • The cash lying in the electronic cash ledger, being TDS deducted under Section 51, was in excess of the petitioner's output tax liability and hence refundable.
  • Relied on a Circular issued by the Government of India on 17.11.2021 clarifying that any amount remaining unutilised in the electronic cash ledger after discharge of tax and other dues can be refunded as excess balance under the proviso to Section 54(1) read with Section 49(6) of the CGST Act.
  • The rejection order, having been passed on 29.08.2020, did not have the benefit of this subsequent clarification.

Respondent's Arguments

  • The rejecting authority had found, on comparison of GSTR-3B against GSTR-2A as on the date of the order, a discrepancy that warranted rejection of the refund claim as framed.
  • The learned Government Pleader for Commercial Taxes fairly submitted that since the CBIC Circular came into existence only after the impugned order was passed, the matter be remanded to the concerned officer to decide afresh in light of the Circular.

Court Order / Findings

  • The Court noted the Circular dated 17.11.2021 categorically clarifies that any amount remaining unutilised in the electronic cash ledger, after discharge of tax and other dues, can be refunded as excess balance under the proviso to Section 54(1) read with Section 49(6) of the CGST Act, 2017.
  • Accepting the Government Pleader's fair concession, the Court set aside the order dated 29.08.2020 and remanded the matter to the Assistant Commissioner to pass fresh orders after considering the CBIC Circular and other applicable authorities.
  • Directed that fresh orders be passed preferably within three weeks, after hearing the petitioner if required.

Important Clarification

  • A GST TDS amount deducted under Section 51 and credited to the electronic cash ledger, once in excess of the output tax liability, is refundable as “excess balance in electronic cash ledger” under the proviso to Section 54(1) read with Section 49(6) of the CGST Act, as clarified by the CBIC Circular dated 17.11.2021.
  • Adjudicating authorities are obliged to apply subsequently issued clarificatory circulars while re-deciding pending or remanded refund claims, even where the original order predates the circular.

Sections Involved

  • Section 51, AP GST Act, 2017 — deduction of tax at source by specified persons on certain contracts.
  • Section 54, CGST Act, 2017 — refund of tax, including proviso governing excess balance in the electronic cash ledger.
  • Section 49(6), CGST Act, 2017 — refund of balance in electronic cash or credit ledger after discharge of tax liability.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee — the order rejecting the refund claim was set aside and the matter remanded for a fresh decision applying the CBIC Circular within three weeks.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No. 23089 of 2020
Coram: Hon'ble Sri Justice C. Praveen Kumar and Hon'ble Smt. Justice V. Sujatha
Date of Order: 28.03.2022

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