GST Update

Desk of CA. Praveen Sharma – 915 Series (CAPS)

Andhra Pradesh High Court in the case of RK Infracorp Private Limited

The petitioner, a GST-registered works contractor, was subjected to audit for FY 2021–22 and 2022–23, after which a DRC-01 was issued alleging short payment of GST by applying 12% instead of 18% on road infrastructure works.

An adjudication order dated 14.08.2025 was passed demanding GST at 18% along with interest and penalty, creating a significant tax liability under CGST and SGST.

As the contractee had paid GST only at 12%, the petitioner sought reimbursement of the differential tax, which was denied on the ground that the applicable rate was only 12%.

Initially, the petitioner sought directions against the contractee, but later amended the writ petition to directly challenge the GST demand order.

In support, the petitioner relied on a certificate issued by the Industrial Area Local Authority stating that the roads constructed were public roads meant for industrial as well as general public use.

Based on this certificate, it was argued that the works qualified for the concessional GST rate of 12% applicable to specified public infrastructure projects.

The High Court observed that the certificate required proper examination and held that the levy of GST at 18% on road works could not be sustained without fresh consideration.

Accordingly, the demand relating to road works was set aside and the matter was remanded to the department for year-wise reassessment, while demands on other components were left unchanged.

LINK: CA. Praveen Sharma on Linkedin

Regards
CAPS