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

Here's a summary of the judgment:

1. Outcome
The Writ Petitions are disposed of. The demand notices dated 13.03.2020 issued to the Petitioner are to be kept in abeyance. The 1st Respondent (Assistant Commissioner of State Tax) is directed to take a decision regarding the additional demand only after the disposal of the refund application, which shall be in accordance with the common order passed by the Court in two related writ petitions (W.P.Nos.6271 and 6299 of 2020) that were clubbed and disposed of on the same date.

2. Core Issue
The core issue is the Petitioner's claim for a refund of excess Tax Deducted at Source (TDS) amounting to Rs.13,01,31,759/- (for July 2017 to March 2019) and Rs.5,56,88,300/- (for April 2019 to July 2019) from its electronic cash ledger, which was denied by tax authorities. This denial led to a consequential tax demand. The dispute centres on the correct determination of the 'place of supply' for a works contract executed across two states (Telangana and Maharashtra), the proper jurisdiction for refund of TDS pertaining to work in another state, and the validity of the tax demand.

3. Key Facts
* Petitioner: M/s. L&T PES JV, an unincorporated Joint Venture (JV) registered under GST in both Telangana and Maharashtra.
* Contract: Construction of Medigadda Irrigation Barrage at Kaleshwaram, for the Kaleshwaram Irrigation Project Corporation Limited (KIPCL), funded by the State of Telangana.
* Project Location: The works contract was executed across two states: Telangana and Maharashtra, based on an Inter-Board Agreement.
* TDS Deduction: KIPCL deducted GST TDS on the entire contract value (including the portion of work executed in Maharashtra) and deposited the entire amount in the State of Telangana.
* Refund Claim: Petitioner applied for a refund of excess TDS lying in its electronic cash ledger, totaling approximately Rs.27 crores.
* Initial Rejection: The 1st Respondent rejected the refund application, stating the taxable value reported by the Petitioner was less than the amount paid by KIPCL.
* Appellate Authority Decision: The 6th Respondent (Appellate Joint Commissioner (ST)) set aside the 1st Respondent's rejection, acknowledging that the petitioner was liable to register and report turnover in both states. However, it held that the refund for the Maharashtra portion of work must be claimed in Maharashtra, and only allowed a partial refund of Rs.4,55,65,816/- related to Telangana.
* Tax Demand: Consequent to the refund rejection, the 1st Respondent raised an additional demand of Rs.14,28,54,110/- via Form GST DRC-07 for the period April 2019 to July 2019, asserting that the 'place of supply' entirely fell within Telangana.
* Related Cases: The present writ petitions were clubbed with W.P.Nos.6271 and 6299 of 2020, which were disposed of by a common order on the same date.

4. Arguments (Taxpayer vs Revenue)

• Taxpayer (M/s. L&T PES JV):

  • The entire TDS was wrongly deposited in Telangana, despite a significant portion of work being executed in Maharashtra.
  • As per the proviso to Section 51 of the CGST Act, no TDS should have been deducted for the Maharashtra portion of work, as the location of the supplier and place of supply were different from the recipient's registration state.
  • Petitioner independently discharged tax liability in Maharashtra for work done there.
  • The 6th Respondent erred in directing the Petitioner to claim the Maharashtra-related TDS from Maharashtra, as the entire amount was remitted to Telangana.
  • The demand notice by the 1st Respondent (DRC-07) based on improper TDS remittance and back-calculation of turnover is not sustainable.
  • Sought refund of the entire excess TDS amount.

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

  • The 6th Respondent (Telangana authority) lacks jurisdiction to examine or refund TDS relating to works executed in Maharashtra.
  • The 'place of supply' entirely falls under Telangana State, as the Telangana Government funded the project and contracted the work, and had no existence in Maharashtra. Thus, the Petitioner should have reported the full turnover in Telangana.
  • The Petitioner failed to challenge the 4th Respondent's TDS deduction based on Section 51 proviso.
  • The 6th Respondent's proportionate refund was justified as the Petitioner did not furnish details of TDS specific to Telangana work.
  • Petitioner's claim of independent tax discharge in Maharashtra was unverified, and there was no liability for such discharge in Maharashtra.
  • The demand in DRC-07 was valid, and the Petitioner should have pursued a regular appeal against it instead of a writ petition.

5. Court’s Reasoning
* The Court noted the 6th Respondent's finding that the 1st Respondent had erred by ignoring IGST Act provisions and erroneously rejecting the refund claim.
* The Court affirmed that the nature of the supply was intra-state in the respective states and tax liability should be discharged individually based on work executed in each state.
* Applying Section 12(3) of the IGST Act, the Court held that the 'place of supply' is both states, proportionate to the value of services rendered in each.
* However, the Court found that the Petitioner failed to provide:
* The inter se agreement between the JV partners (L&T and PES) regarding work allocation.
* Material to determine the exact proportion of work executed in each state and the corresponding tax liability.
* Evidence of independently discharging tax liability in Maharashtra.
* Given these evidentiary gaps and the complex inter-state aspects, the Court deemed it inappropriate to directly determine the exact refund or demand in these petitions.
* Crucially, the Court decided that the present petitions would be governed by the common order passed in the clubbed W.P.Nos.6271 and 6299 of 2020. Therefore, the demand notices would be kept in abeyance, pending the outcome of the refund application as decided in those related matters.

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

7. Precedents Cited
The judgment did not cite any external judicial precedents. It referred to the Court's own "common order dated 29.11.2024" passed in W.P.Nos.6271 and 6299 of 2020, upon which the decision in the present petitions relies.