Brief summary of the case
Court: Bombay High Court
Number: WRIT PETITION NO. 2980 OF 2019
Petitioner: L & T IHI Consortium
Respondent: Union of India
Date of decision: 14.11.2024
Judges: Hon’ble Mr. G. S. KULKARNI & JITENDRA JAIN, JJ.
Facts:
- L&T IHI Consortium executed the Mumbai Trans Harbour Link project for MMRDA.
- Advances classified as “loans” were taxed under GST.
- ITC was denied until supply was rendered; refunds were restricted.
Court’s Analysis:
- GST on advances is valid and lawful under GST laws (Sections 7 & 13).
- Denial of ITC until actual supply is consistent with Section 16(2)(b).
- Refund restrictions under Section 54(3) are constitutional but cause hardship for unique cases.
- No explicit double taxation occurs as GST on advances can be adjusted against future invoices.
Rulings:
- GST on advances is lawful; provisions are constitutional.
- Directed the GST Council to revisit refund mechanisms for unutilized ITC in special cases like this.
- Operational inefficiencies causing financial prejudice should be addressed.
Conclusion:
The petition was partially allowed. While the court upheld GST provisions, it emphasized the need for administrative reforms to ease refund mechanisms for unutilized ITC, especially for government projects.
