THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS-1) BENGALURU & ORS.
v.
M/S. NAM ESTATES PRIVATE LIMITED.
WRIT APPEAL No. 1195 of 2024 (T-RES)
DATED: JANUARY 9, 2025
HIGH COURT: KARNATAKA
Facts: The Respondent entered into a contract with M/s Mavin Switch Gears and Control Private Limited for the supply, installation, and commissioning of Gas insulated Sub-stations (GIS)/Conventional Sub-stations and extra-high voltage transmission lines for which an advance payment of Rs. 14,08,79,262/- was made by Respondent against a bank guarantee provided by the supplier.
Upon receipt of this payment, the supplier issued tax invoice which included GST of Rs. 2,53,58,268/- and declared this transaction in its GSTR-1 and GSTR-3B returns. However, the supplier failed to deliver the goods and services, leading to cancellation of contract. Consequently, the advance payment was recovered by the Respondent encashing the bank guarantee provided by the supplier. Subsequently, the Respondent filed a refund application , seeking refund of GST amount paid. The department, reviewed the application and a refund rejection order was passed against which an appeal was filed by the Respondent before the Petitioner, wherein, the while rejecting the appeal highlighted that supplier, was obligated to issue credit notes for the cancelled contract and declare these in their tax return, adjusting the tax liability accordingly. It was concluded by the Appellate Authority that the Petitioner ccould not seek a refund, as the tax paid on the advance was the supplier’s responsibility.
This writ petition has been filed by the department against the Order passed by the Ld. Single Judge, wherein, the Order of the Appellate Authority was set aside.
Issues : Whether the Respondent is entitled to get refund of the GST amount paid on advance payment ?
Held: Noted the Revenue could not have declined the refund on the ground that Credit Note was not issued by the supplier, upon whom essentially the duty to pay tax rested in as much as the question of issuing such a note would not arise since goods were never delivered and that there was a gross breach of contract because of which it was rescinded and the price paid in advance was retrieved by encashing the bank guarantee. The GST portal and the returns of both the Assessee herein and his vendor reflect the payment of GST amount in a sum of Rs.2,53,58,268/-
Relied upon the judgment of the Hon’ble Supreme Court in Mafatlal Industries Ltd. & Ors. v. UOI & Ors. and Observed that the Petitioner is not going to make his unjust enrichment by obtaining the refund, but will get back his own money
Held that the appeal being devoid of merits is liable to be rejected and directed the Petitioner to refund the GST amount to the Respondent within a period of eight weeks along with the interest at the statutory admissible rate, which may be recovered on such payment, from the erring officials.
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