Facts of the Case

The petitioner, Griham Food and Hotel Pvt Ltd, had entered into a catering licence contract with the IRCTC, from which it obtained an early and honourable exit by mutual agreement, without any forfeiture or debarment being imposed. The petitioner applied to the Group General Manager, IRCTC, Eastern Zone, Kolkata, for refund of the GST component paid under the contract following its cancellation. When IRCTC sat over the matter, the petitioner had earlier filed WPO 1732 of 2022, disposed of on 05.04.2022 by a coordinate Bench, which found IRCTC's refusal devoid of reasons and directed reconsideration of the representation. IRCTC nevertheless reiterated its refusal, leading to the present writ petition. During the hearing, IRCTC expressed willingness to refund the GST component subject to a complementary refund from the GST authorities, and the petitioner filed an affidavit confirming it had not availed input tax credit of the GST in question.

Issues Involved

  1. Whether the petitioner was entitled to refund of the GST component from IRCTC following mutual cancellation of the catering contract.
  2. Whether IRCTC's refund obligation to the petitioner could be made conditional on it first receiving a complementary refund from the GST authorities.

Petitioner's Arguments

  • Since the contract was cancelled by mutual agreement with no forfeiture or debarment, and the petitioner had not availed any input tax credit of the GST paid, there was no impediment to IRCTC refunding the GST component to the petitioner.

Respondent's Arguments

  • IRCTC contended it was agreeable to refunding the GST component to the petitioner, but only subject to receiving a complementary refund of the same from the GST authorities.

Court Order / Findings

  • The Court held that IRCTC's entitlement to a complementary refund from the GST authorities could not be mandated in a blanket fashion by court direction and could not be made a precondition for refunding the petitioner, especially since IRCTC had failed to justify its delay in sitting over the petitioner's timely refund application.
  • The Court found no doubt that the petitioner was entitled to a refund of the GST component from IRCTC in view of the mutually agreed cancellation of the licence.
  • IRCTC was directed to refund the GST component to the petitioner within three weeks, while being given liberty to separately apply for a complementary refund from the GST authorities, who would process such application in accordance with law if IRCTC was otherwise entitled to it.

Important Clarification

A contracting public sector entity that has collected GST under a licence subsequently cancelled by mutual agreement cannot withhold the refund due to the licensee by making it conditional on first securing its own complementary refund from the tax authorities — the licensee's entitlement to refund and the entity's own refund claim against the department are treated as separate and independently determinable questions.

Sections Involved

  • Central Goods and Services Tax Act, 2017 / Integrated Goods and Services Tax Act, 2017 – governs the refund of GST and the requirement of non-availment of input tax credit as a condition for such refund to a service recipient.

Decision – In Favour of

The decision was in favour of the Assessee (the petitioner-licensee), with IRCTC directed to refund the GST component within three weeks, independent of its own pending claim against the GST authorities.

Case Details

  • Court: High Court at Calcutta, Constitutional Writ Jurisdiction, Original Side
  • Case Number: WPO/1053/2023
  • Coram: Hon'ble Justice Sabyasachi Bhattacharyya
  • Date of Order: 19 July 2023

Link to Download the Order

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