Fabricated steel structures are taxable as unscheduled goods at 13.5% rather than declared goods.

The petitioner, a company executing steel structure works for the Ganga Bridge project, challenged the recovery of tax and the denial of refunds for various assessment periods (2005-06 to 2012-13).

In CWJC 3800/2019, the petitioner contested an assessment where iron and steel structures were taxed at 13.5% instead of the 5% declared, leading to a recovery of ₹18.52 Crores via bank attachment.

In the remaining three writ petitions, the petitioner sought refunds of excess tax and input tax credit (ITC) which were withheld by the authorities despite a revisional order setting aside penalties.

The Respondents maintained that the fabricated structures were "unscheduled goods"

and that refunds were ineligible due to outstanding dues for other years (2013-14) and failure to file Tax Audit Reports.

1. Whether fabricated iron and steel structures used in a works contract are taxable as declared goods under Section 14 of the CST Act at 5% or as unscheduled goods at 13.5% under the Bihar VAT Act.

2. Whether the petitioner is entitled to a refund of tax and input tax credit when there are pending tax liabilities for subsequent assessment years.

3. Whether the tax authorities can withhold refunds based on the non-filing of Tax Audit Reports and discrepancies in purchase records.

The Court considered Section 14(1)(iv) of the Central Sales Tax Act, 1956, regarding "declared goods"

and Schedule IV of the Bihar Value Added Tax Act, 2005.

It applied Section 41(6) regarding penalties

Section 31 regarding reassessment

and Sections 68 to 70 of the Bihar VAT Act, which govern the mechanism for refunds and the statutory right of the State to adjust refunds against existing tax dues.

The Court further noted the mandatory requirement of filing a Tax Audit Report under the first proviso to Section 16(1) for claiming ITC refunds.

Regarding the tax rate (CWJC 3800/2019), the Court noted that the outcome was contingent on parallel proceedings (CWJC 3600/2020 et al.), which had been dismissed; thus, the petitioner’s claim for a lower tax rate failed.

Regarding the refund claims (CWJC 13258, 13286, 13854 of 2019), the Court observed that the Respondents provided detailed justifications for denial, including the petitioner's failure to file the mandatory Tax Audit Report for 2011-12 and the existence of a substantial tax liability of over ₹33 Crores for the year 2013-14.

The Court highlighted that under Sections 68-70, a dealer owing money to the department for any period is ineligible for a refund for a different period until debts are cleared.

Critically, the Court found that despite being served with these counter-affidavits years prior, the petitioner failed to file rejoinders or deny the State's specific allegations of "false and contradictory" claims.

It held that the challenge to the tax rate in CWJC 3800/2019 was unsustainable following the dismissal of related lead cases.

Regarding the refund petitions, the Court held that the petitioner failed to rebut the State's evidence concerning outstanding tax liabilities and procedural non-compliance (missing Tax Audit Reports), rendering the claims for refund meritless.

No relief or refund was granted.