Case Title: M/s ITD Cemindia JV v. Joint Commissioner of Commercial Taxes (Appeals)-5 & Anr.,
Court: High Court of Karnataka, Bengaluru
Petition No.: W.P. No. 2817 of 2025 (T-RES)
Date of Judgment: 12 March 2025
Category of Dispute: Refund of accumulated ITC due to inverted duty structure
Relevant Sections: Section 54(3), Section 107(11) of the CGST/KGST Acts; Notifications 15/2017, 20/2017, 1/2018, 15/2023 – Central Tax (Rate)
Facts (Para 1–4)
The petitioner, M/s ITD Cemindia JV, a joint venture formed between ITD Cementation India Ltd. and Italian-Thai Development Public Company Ltd., was awarded a contract by Bangalore Metro Rail Corporation (BMRCL) for construction of elevated viaducts and stations. The petitioner applied for a refund of unutilized Input Tax Credit (ITC) under Section 54(3) of the CGST Act for the tax period May 2020, amounting to ₹3.26 crore, arising due to an inverted duty structure. The Assistant Commissioner rejected the refund (Form GST-RFD-06 dated 02.10.2022), which was upheld in appeal (Order in Form GST-APL-04 dated 24.04.2024). The petitioner approached the High Court challenging both orders and seeking a refund based on the substituted formula under Notification No. 14/2022-CT dated 05.07.2022.
Questions for Determination (Para 3–4)
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Whether the BMRCL construction activity constituted a works contract under Entry 6(a) of Schedule II or a construction service under Entry 5(b).
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Whether Notification No. 15/2017 disallowing refund of unutilized ITC applied to the petitioner’s Metro works.
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Whether subsequent notifications and the GST Council’s 52nd meeting recommendations altered the refund eligibility.
Observations (Para 7–15)
The Court referred to its earlier decision in W.P. No. 2490/2023 (28.08.2024) concerning the same petitioner for earlier periods, where refund denial was quashed. The Court noted:
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The BMRCL contract was a works contract under Section 2(119) read with Entry 6(a) of Schedule II — not a simple construction service under Entry 5(b).
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Notification No. 15/2017 excluded only construction of buildings intended for sale, not government infrastructure or Metro contracts.
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The Revenue’s reliance on Notification No. 20/2017, which excluded Metro works, was misplaced because it was later substituted by Notification No. 1/2018, re-including Metro contracts.
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The subsequent Notification No. 15/2023 (19.10.2023) clarified that refund exclusion applied solely to construction of complexes/buildings for sale in the real estate sector, thus reinforcing refund eligibility for works contracts executed for government entities.
The Court drew support from Larsen & Toubro Ltd. (2015) 39 STR 913 (SC) and Total Environment Building Systems Pvt. Ltd. (2022), emphasizing the distinction between service contracts simpliciter and composite works contracts.
Judgment (Para 4–5, 15–18)
The Court held that the earlier judgment in W.P. No. 2490/2023 applied squarely to the present case. It therefore:
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Quashed the appellate and refund rejection orders dated 24.04.2024 and 02.10.2022.
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Directed the department to process the refund claim for May 2020 and pay the amount with applicable interest within six weeks.
The writ petition was accordingly allowed.
Summary of Referred Cases
| Case | Court & Citation | Ratio / Verdict |
|---|---|---|
| Larsen & Toubro Ltd. v. CCE & Customs | Supreme Court, 2015 (39) STR 913 (SC) | Differentiated service contracts simpliciter from composite works contracts; only the latter involve transfer of property and are distinct from taxable services. |
| Total Environment Building Systems Pvt. Ltd. v. DCCT | Supreme Court, 02.08.2022 | Reiterated that composite contracts involving transfer of goods and services are to be treated as works contracts. |
| ITD Cemindia JV v. JCCT (Appeals)-5 | Karnataka HC, W.P. No. 2490/2023 (28.08.2024) | Allowed refund for inverted duty on Metro works, holding them eligible under Entry 6(a) and not excluded under Notification 15/2017. |
Between Fine Lines
For infrastructure contractors executing Metro and government works, this ruling confirms that refunds under inverted duty structure remain permissible, as the bar under Notification 15/2017 applies only to real estate projects intended for sale. Authorities must align refund scrutiny with the clarified legal position and process pending claims accordingly.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
