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The issue that arises for consideration is, whether the respondents are justified in withholding the refund/ reimbursement in favour of the writ-applicants. The payment of tax by utilization of the tax credit is a valid mode of payment. The denial to release refund/ reimbursement on the ground that only part amount has been paid by the writ-applicants through the electronic cash ledger is not legally tenable. The impugned communication refusing to release the refund/reimbursement of the GST is hereby quashed and set-aside.

Refund/reimbursement of GST amount by Railways —–— The petitioner prayed for quashing the impugned communication dated 13.5.2019 refusing to release refund/reimbursement of GST due to the Petitioners as per the Joint Procedure Order dated 21.1.2018 passed by the Western Railways. The writ-applicants are the Government approved railway contractors. The contractors preferred a representation with the Railways for granting reimbursement of the additional tax liability under the GST Act in respect of the contracts which were entered into prior to the GST regime. The Railways Board issued an order dated 27.10.2017 giving instructions to all the Railway Divisions to issue a Joint Procedure Order for neutralizing the impact of the GST on the existing works allotted prior to the implementation of the GST regime. The applicant submitted claim for reimbursement, which was granted by the Railways on 10.12.2019. The applicants were asked from the Railways alleging that as against the tax refund of Rs.1,23,02,620/-, the tax of only Rs.33,92,980/-was paid through the electronic cash ledger. Thereafter the refund /reimbursement was withheld despite the fact that all the details as called for had been provided. The court observed that the applicants are entitled to refund in terms of the order for the GST neutralization issued by the Ministry of Railways read with the JPO and the supplementary agreement. The tenor of the impugned communication dated 13.5.2019 revealed that even after the generation of the pay order, the same has not been disbursed primarily on the basis that the writ-applicants have paid a much lower amount of tax through the electronic cash ledger. It is unfortunate to note that the respondents have not been able to understand the basic scheme of the GST Act. The tax payment through the electronic credit ledger is a legally recognized mode of payment under the Act. The denial to release refund/ reimbursement on the ground that only part amount has been paid by the writ-applicants through the electronic cash ledger is not legally tenable.

Held that:- The Hon’ble High Court quashed the impugned communication dated 13.5.2019 refusing to release the refund/reimbursement of the GST and directed the respondents to forthwith release the refund of Rs.1,23,02,620/- in respect of which the pay order has already been generated, within a period of four weeks.