Order date – 21 July 2022

Facts – 

• The Petitioner, Walchandnagar Industries Limited, is a registered dealer in the State of Andhra Pradesh, engaged in the business of execution of contracts, manufacturing or sale of machinery and general goods.
• The petitioner received a work order from Ministry of Defence (R&D), Government of India, “Aakanksha” Development Enclave, Rao Tularam Marg, New Delhi. The works/services have been executed at the site at Visakhapatnam in the state of Andhra Pradesh. In terms of the contract, the payments were to be released from the Ministry of Defence, New Delhi based on the completion of work from stage to stage.
• The petitioner executed the works/services as per the terms of the contract in the recipient’s location at Visakhapatnam. As the impugned transactions are interstate transactions, the petitioner collected Integrated Goods & Services Tax (for short, “I.G.S.T.”) from the recipient.
• Revenue issued a show cause notice proposing to treat the transactions as intrastate supply of goods instead of interstate supply of goods.
• The petitioner admitted the contension of Revenue and requested the authorities to adjust the monies paid under I.G.S.T. towards the dues payable under C.G.S.T. and S.G.S.T. but the same came to be rejected by the authorities.
• Being aggrieved, this writ petition is filed. 

Issue – 

• Whether adjustment of the IGST amounts paid by the Petitioner towards CGST and SGST is possible?

Order – 

• The Court held that the Revenue cannot make adjustment of I.G.S.T. into C.G.S.T. and S.G.S.T. The taxable person may claim refund of I.G.S.T. after payment of C.G.S.T. & S.G.S.T. and in view of the same, the objections filed by the taxable person were held not tenable.
• In view of the fact that the nature of transaction is not in dispute, the present Writ Petition is disposed of directing the petitioner to pay C.G.S.T. and S.G.S.T. and thereafter, make a claim for refund of the amount under I.G.S.T.