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March 11, 2023

KVAT: Credit for any funds collected by the State Government must be given to the petitioner

by CA Shivam Jaiswal in GST, GST Circular Notification

KVAT: Credit for any funds collected by the State Government must be given to the petitioner

Fact and issue of the case

The writ petition has been filed praying to quash Ext.P2 and for direction to the 2nd respondent to allow the credit of Rs.78,52,574/- paid by the 4th respondent on behalf of the petitioner under Section 10(1) of the KVAT Act.

The petitioner had undertaken works on behalf of the Kerala State Electricity Board and payments had been received after deducting the sum of Rs.79,53,497/-.

The Electricity Board, which is represented by the 4th respondent, Deputy Chief Engineer in this writ petition had remitted the amount to the Government and issued Ext.P6 to the petitioner which shows that the amount had been remitted vide cheque dated 09.04.2015.

Observation by the court

The case of the petitioner is that, even though the amount has been received by the Government, the petitioner is not given the credit of the tax already paid. The 2nd respondent has filed a counter affidavit in which, it is stated that the 4th respondent has not given specification in their reply that the amount deducted is remitted in favour of the petitioner or their office at Mumbai.

When the case was taken up earlier, this Court had directed the Government Pleader to get specific instruction as to whether the amount has come into the coffers of the State. When the case is taken up today, it is submitted that the amount has been received by the State. In such circumstances, the petitioner cannot be put to peril. The petitioner necessarily has to get the benefit of credit of the tax which has already been paid. Since the awarder is the 4th respondent, it is for them to clarify the fact of the remittance to the State in order to put the records straight. There will hence be an interim order directing the 4th respondent to address the State regarding the manner in which they had remitted the payments to the petitioner, deducted the amount and remitted the same to the Government. Such communication shall be issued within ten days from today. On receipt of the communication, the 2nd respondent shall immediately take steps to give credit of such amount to the petitioner within a week from the receipt of the clarification from the 4 th respondent.

Hand over.

Post the writ petition on 13.03.2023.


In the result, appeal of the assessee is allowed and ruled in favour of the assessee

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