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The Chhattisgarh High Court has recently passed a judgement that allows the reimbursement of additional tax liability on companies involved in construction activities in the pre-GST regime. The judgement has been welcomed by the industry as it provides relief to the companies that were facing financial burden due to the additional tax liability.
Before the introduction of GST in 2017, companies involved in construction activities were required to pay excise duty, value-added tax (VAT), and other taxes at different stages of production and supply chain. However, with the implementation of GST, these taxes were replaced by a single tax, which led to confusion regarding the calculation of tax liability for the activities carried out before the introduction of GST.
The Chhattisgarh High Court's judgement came in response to a petition filed by a construction company, which sought reimbursement of the additional tax liability that it had paid in the pre-GST regime. The company argued that the calculation of tax liability was not clear before the introduction of GST, and it had paid excess tax liability due to confusion and ambiguity.
The court examined the provisions of the pre-GST regime and noted that there was no provision for claiming a refund of excess tax paid. However, the court also noted that the GST law allowed for the reimbursement of the transitional credit, which included the taxes paid in the pre-GST regime. The court held that if the transitional credit was allowed to be claimed, the excess tax paid by the companies should also be reimbursed.
The judgement is significant as it provides relief to the companies that were facing financial burden due to the additional tax liability in the pre-GST regime. The reimbursement of excess tax paid will improve the financial health of these companies and encourage them to undertake more construction activities, which will have a positive impact on the economy.
In conclusion, the Chhattisgarh High Court's judgement allowing reimbursement of additional tax liability on companies involved in construction activities in the pre-GST regime is a welcome move that provides relief to the companies and improves their financial health. The judgement will have a positive impact on the economy by encouraging companies to undertake more construction activities.
For any further doubt on matters related to GST law, it’s compliance and advisory, feel free to contact ASC Group.
Source: Live Law
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