The Telangana High Court has granted interim relief to Megha Engineering and Infrastructures Ltd (MEIL) from immediate coercive action concerning a substantial tax demand linked to the Kaleshwaram Lift Irrigation Project.
Interim Order Details
In a significant interim order, the court directed that no coercive steps be taken against the company, provided it deposits 10% of the disputed demand with the state tax authorities. A bench led by Chief Justice Aparesh Kumar Singh and Justice GM Mohiuddin issued the directive and adjourned the matter for three weeks.
Background of the Dispute
The dispute stems from the state tax department's order requiring MEIL to pay Goods and Services Tax (GST) at 18% for work executed on the Kaleshwaram project (link IV) and for the Hyderabad Metropolitan Water Supply and Sewerage Board, as against the discounted tax rate of 12%. Challenging the demand, MEIL contended that the assessment was made 'at the dictates' of the commissioner, state tax, rather than on the merits of its case.
Arguments Presented
Senior counsel K Vivek Reddy, representing MEIL, stressed that the company provides services to 'local authorities,' which should still attract the 12% rate. He further noted that the issue had already been audited earlier, with objections dropped after acceptance of the lower rate. The state, however, defended its position. Special government pleader Swaroop Oorilla argued that a 2021 amendment narrowed eligibility for concessional rates, excluding the organisations MEIL works with. According to the state, the 18% rate is now the correct legal requirement, and tax authorities were applying updated law rather than acting under external pressure.
Court's Directive
Taking note of both sides, the bench directed the state to file a counter affidavit. It also asked the senior standing counsel for central tax to seek instructions and, if necessary, submit a response. The court has scheduled the next hearing after three weeks.
This development provides temporary relief to MEIL, allowing it to continue operations without immediate coercive action while the legal process unfolds. The case highlights the ongoing complexities in GST classification for infrastructure projects involving government authorities.
