Simplified Explanation of the Judgment
In this case, a joint venture undertaking major infrastructure work in Bihar (the petitioner) had filed two writ petitions before the Patna High Court challenging certain aspects of the Goods and Services Tax (GST) regime. The respondents included the Union of India, the GST Council, and the State tax authorities.
Although the detailed prayers are not reproduced in the short order, it is clear from the court’s reference to the Supreme Court decision in Union of India & Ors. v. VKC Footsteps India Pvt. Ltd., Civil Appeal No. 4810 of 2021, that the grievance related to refund of input tax credit (ITC) under the “inverted duty structure” and the scope of refund under Section 54 of the Central Goods and Services Tax (CGST) Act and corresponding State provisions. In many such cases across India, taxpayers had challenged the restriction that allowed refund of unutilised ITC only in respect of “inputs” (goods) and not “input services”.
The petitioner here is a construction/infrastructure joint venture working on large projects in Bihar. Such entities typically procure substantial goods (cement, steel, etc.) as well as services (consultancy, design, subcontracting) for execution of works contracts. Where the rate of tax on inputs is higher than that on output supplies, an inverted duty situation arises, and taxpayers often accumulate unutilised ITC.
To seek relief, the petitioner approached the Patna High Court by way of writ petitions (Civil Writ Jurisdiction Case No. 11470 of 2019 and 11501 of 2019). During the pendency of these petitions, several High Courts across the country delivered conflicting decisions on whether refund of unutilised ITC in inverted duty cases could include input services. Ultimately, the issue was settled authoritatively by the Supreme Court in VKC Footsteps, where the Court upheld the validity of the refund restriction and held that Parliament/legislature could limit refund only to “inputs” (goods) and exclude “input services” without violating constitutional principles.
By the time the present matter was taken up by the Patna High Court on 13 January 2022, the Supreme Court’s decision in VKC Footsteps had already been pronounced. The learned senior counsel appearing for the petitioner stated, on instructions, that in view of the law now settled by the Supreme Court, the petitioner wished to withdraw the writ petitions.
The Division Bench, comprising Hon’ble the Chief Justice and Hon’ble Mr. Justice S. Kumar, recorded this submission. The Court observed that the issue raised already stood settled by the Supreme Court in Union of India and Ors. v. VKC Footsteps India Pvt. Ltd., Civil Appeal No. 4810 of 2021. Consequently, permission was granted to the petitioner to withdraw both writ petitions, and the matters were disposed of as withdrawn. Any pending interlocutory applications were also disposed of.
The order is brief but legally significant. It reflects a common practice in constitutional and tax litigation–once the Supreme Court settles a point of law, High Courts and litigants are bound by that decision. If a pending writ petition is based on a legal position contrary to the final Supreme Court view, continuing the litigation becomes futile.
In essence, the judgment can be understood as follows:
- The petitioner had approached the Patna High Court against certain GST provisions or their implementation, likely relating to refund of unutilised ITC in an inverted duty structure scenario.
- While the writ petitions were pending, the Supreme Court delivered a final, binding judgment on the same point of law in VKC Footsteps.
- Recognising that the Supreme Court’s decision was against the position they were canvassing, the petitioner opted to withdraw the writ petitions.
- The High Court allowed this request, and no further adjudication on merits was undertaken.
Thus, the case did not result in an independent interpretation of GST law by the Patna High Court; instead, it demonstrates the direct impact of the Supreme Court’s authoritative decision on pending High Court matters across the country.
Significance or Implication of the Judgment
Even though the order is short and primarily procedural, it has certain broader implications for taxpayers, government authorities, and legal practitioners:
- Reinforcement of Supreme Court’s Binding Authority
The order underlines that once the Supreme Court has settled a legal issue, all High Courts and litigants must follow that pronouncement. Any contrary or parallel litigation becomes practically non-maintainable. This ensures uniformity of tax law across states. - Clarity for GST Refund Claims in Inverted Duty Cases
For businesses operating in Bihar, including contractors and infrastructure entities, this order indicates that the Patna High Court will follow the VKC Footsteps ruling. Claims for refund of unutilised ITC on input services under the inverted duty structure are unlikely to succeed after the Supreme Court judgment. - Practical Guidance for Pending and Future Litigation
Litigants who had filed writ petitions before the VKC Footsteps decision, or who were considering challenging similar provisions, are effectively made aware that such petitions will not be entertained once the Supreme Court has upheld the statutory scheme. - Administrative Certainty for Tax Departments
For the Union of India, the GST Council, and the State tax departments, this order brings administrative certainty. They can process refund claims in line with the Supreme Court’s interpretation without fear of conflicting High Court orders in Bihar. - Illustration of Judicial Economy
By allowing withdrawal instead of insisting on a full hearing and detailed judgment, the Court avoided duplication of legal analysis that had already been carried out by the Supreme Court. This respects judicial time and focuses High Court efforts on unresolved or fact-specific issues.
For the general public and business community in Bihar, the underlying message is that challenges to core GST refund provisions—once decided by the Supreme Court—cannot be restarted at High Court level simply by changing the drafting or form of the petition.
Legal Issue(s) Decided and the Court’s Decision with Reasoning
Although the High Court did not decide the GST issue on merits, the effective legal position emerging from this order can be summarised as:
- Whether the writ petitions challenging aspects of GST refund/ITC (likely linked to inverted duty structure and input service credit) should continue after the Supreme Court’s decision in VKC Footsteps.
- The Court recorded that the petitioner, through senior counsel, sought permission to withdraw both writ petitions in view of the Supreme Court’s decision.
- The Bench held that the issue raised “already stands settled” by the Supreme Court in Union of India and Ors. v. VKC Footsteps India Pvt. Ltd., Civil Appeal No. 4810/2021.
- On that basis, the Court permitted withdrawal and disposed of the petitions accordingly.
Key reasoning points (implied from the order and the legal context):
- Once the Supreme Court has given a final ruling on a question of law, High Courts cannot take a contrary view on the same issue.
- Since the petitioner’s challenge was covered by the Supreme Court’s decision, pursuing the writ petition further would be purposeless.
- Withdrawal at the request of the petitioner is a suitable method to close such matters, without requiring a detailed judgment repeating the Supreme Court’s reasoning.
Judgments Relied Upon or Cited by Court
- Union of India and Ors. v. VKC Footsteps India Pvt. Ltd.
- Civil Appeal No. 4810 of 2021, Supreme Court of India.
- Cited by the Patna High Court as the authoritative decision settling the issue raised in the writ petitions, leading to their withdrawal.
Case Title
- M/s AFCONS–SIBMOST Joint Venture vs. Union of India & Ors.
(heard together with the connected writ petition involving Bihar Commercial Taxes Department & Ors.)
Case Number
- Civil Writ Jurisdiction Case No. 11470 of 2019
- Civil Writ Jurisdiction Case No. 11501 of 2019
Coram and Names of Judges
- Hon’ble the Chief Justice
- Hon’ble Mr. Justice S. Kumar
Names of Advocates and Who They Appeared For
- For the petitioner:
- Mr. Sujit Ghosh, Senior Advocate
- Mr. Anujit Sinha, Advocate
- For the respondents:
- Mr. Vikash Kumar, Standing Counsel-11 (State)
- Dr. K.N. Singh, Assistant Solicitor General (Union of India)
- Mr. Anshuman Singh, Senior Standing Counsel, CGST & CX
Link to Judgment
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