M/S. L And T Pes Jv vs Assistant Commissioner Of State Tax And ... on 29 November, 2024

Outcome**
The Writ Petitions were disposed of. The demand notices dated 13.03.2020 were kept in abeyance until the disposal of the refund application in accordance with the common order passed by the same Court on the same date in W.P.Nos.6271 and 6299 of 2020. The 1st Respondent was directed to take a decision on the additional demand depending on the outcome of the refund application in the linked cases.

2. Core Issue
The core issues were:
* Whether the petitioner's refund application for excess GST TDS, part of which related to works executed in a different state (Maharashtra) but deposited in Telangana, was maintainable.
* Whether the Appellate Joint Commissioner (ST) (6th Respondent) had the jurisdiction to grant a refund for the portion of tax deducted for work executed in the State of Maharashtra.
* The correct determination of the "place of supply" for works contracts spanning multiple states and the corresponding tax liability and refund eligibility.

3. Key Facts
* Petitioner: M/s. L&T PES JV, an unincorporated Joint Venture, undertaking a works contract for the construction of Medigadda Irrigation Barrage.
* Contracting Authority: Kaleshwaram Irrigation Project Corporation Limited (KIPCL), Respondent No. 4, sponsored by the State of Telangana.
* Project Scope: The works contract spanned across the States of Telangana and Maharashtra, governed by an Inter-Board Agreement dated 23.08.2016.
* GST Registration: The petitioner obtained separate GST registrations in both Telangana and Maharashtra.
* TDS Deduction: KIPCL deducted GST TDS on the entire contract value, including the portion of work executed in Maharashtra, but deposited the entire amount in the State of Telangana.
* Refund Claims: Petitioner sought refund of Rs.13,01,31,759/- (for July 2017-March 2019) and Rs.5,56,88,300/- (for April 2019-July 2019), contending excess TDS was lying in its electronic cash ledger in Telangana.
* 1st Respondent's Order: The Assistant Commissioner of State Tax (1st Respondent) initially rejected the refund application on 13.01.2020, citing a taxable value reported by the petitioner far less than the amount paid by KIPCL, and subsequently raised an additional demand of Rs.14,28,54,110/- (for April 2019-July 2019) via Form GST DRC-07 on 13.03.2020.
* 6th Respondent's Order (Appellate Authority): The Appellate Joint Commissioner (ST) (6th Respondent) partly allowed the appeal on 12.10.2020. It set aside the 1st Respondent's order for ignoring IGST Act provisions, affirmed the petitioner's liability to register and report turnover in both states, and held that refund was eligible only for the TDS amount relating to work executed in Telangana. The 6th Respondent directed the petitioner to claim refund for the Maharashtra portion from Maharashtra State.

4. Arguments (Taxpayer vs Revenue)

• Taxpayer (M/s. L&T PES JV):

  • The work executed was a works contract spread across Telangana and Maharashtra.
  • TDS was recovered by KIPCL on the entire contract value, including the Maharashtra portion, and wrongly deposited entirely in Telangana.
  • The petitioner has independently discharged GST liability for the work executed in Maharashtra in that state.
  • Telangana State cannot retain the TDS corresponding to the work executed in Maharashtra merely because it funds the project.
  • As per the proviso to Section 51 of the CGST Act, no TDS deduction is required if the location of the supplier and place of supply is different from the recipient's state of registration (e.g., Maharashtra work, Telangana recipient).
  • The 6th Respondent erred in denying the refund for the Maharashtra portion and in asking the petitioner to claim it from Maharashtra, especially when the entire TDS was remitted to Telangana.
  • The 6th Respondent should have directed a refund of the entire claimed amount.

• Revenue (Assistant Commissioner of State Tax & Appellate Joint Commissioner (ST)):

  • (6th Respondent's stance): If the petitioner's claim of work in both states is true, KIPCL's deduction of TDS on the Maharashtra portion was erroneous as per Section 51(1) of the CGST Act. The petitioner did not make representations to KIPCL regarding this.
  • The 6th Respondent (a creature of Telangana State GST Act) lacks jurisdiction to examine transactions or grant refunds for works executed in other states like Maharashtra.
  • The 6th Respondent correctly determined that the refund of TDS related to Maharashtra works should be claimed from Maharashtra State.
  • The petitioner failed to furnish details of the quantum of TDS relating specifically to Telangana work, leading to the adoption of a proportionate refund method.
  • (1st Respondent's stance): The "place of supply" entirely falls under Telangana State since the Telangana Government bore the total project cost without payment bifurcation for Maharashtra/Telangana work. Therefore, the petitioner should have reported the full turnover in its Telangana GSTR 3B returns.
  • If the petitioner paid tax in Maharashtra, it can seek a refund there, but cannot deny taxes due in Telangana.
  • The writ petition challenging the demand notice (GST DRC-07) is not maintainable as the petitioner did not avail the statutory appeal remedy.

5. Court’s Reasoning
* The Court observed that while tax was deducted for work in both states, the entire amount was remitted to Telangana, resulting in an excess in the petitioner's electronic cash ledger.
* It noted that the 6th Respondent correctly identified that the 1st Respondent erred by ignoring the IGST Act and that the petitioner was required to have registrations and report turnover separately based on the quantum of work in each state.
* The Court affirmed the 6th Respondent's view that the service was an intra-state supply in the respective states, and thus tax liability should be discharged individually in each state.
* Crucially, the Court highlighted the petitioner's failure to place on record the inter se agreement between its JV partners (L&T and PES) regarding work allocation, and also the lack of material evidence to substantiate the claim of independent discharge of tax liability in Maharashtra.
* Referring to Section 12(3) of the IGST Act, the Court confirmed that the place of supply would be both states, and the nature of supply intra-state, proportionate to the value of services rendered in respective states.
* Given the "somewhat similar issue" and common hearing with W.P.Nos.6271 and 6299 of 2020, the Court decided that the common order passed in those petitions on the same date would govern the claims in the present petitions. This implies that a detailed determination of the refund eligibility, based on the place of supply for work in both states and corresponding tax liability, would be handled as per the directions in the common order of the linked cases.
* The Court did not make a final determination on the refund amount or direct its immediate disbursement but effectively deferred the resolution, linking it to the outcome of the proceedings in the parallel writ petitions.

6. Statutory References
* Central Goods and Service Tax Act, 2017 (CGST Act): Section 2(119), Section 49(6), Section 51, Section 51(1), Rule 61.
* State Goods and Service Tax Act, 2017 (SGST Act).
* Integrated Goods and Service Tax Act, 2017 (IGST Act): Section 12(3).
* Notification No.50/2018-Central Tax (Rate) dated 13.09.2018.
* Form GST DRC-07.

7. Precedents Cited
None explicitly cited in the provided text. The judgment refers to its own common order passed on the same date in W.P.Nos.6271 and 6299 of 2020, which will govern the outcome of the present petitions.