Nabirul Islam vs. The State Of Assam And 7 Ors.

Held

The Court held that the Circular No. 3/2017-GST dated 24.08.2017 is in accordance with Sections 12 and 13 read with Clause 6(a) of Schedule II of the Act of 2017 and CGST. Consequently, the petitioners are liable to pay GST at 6% under the Act of 2017 and 6% under the CGST for invoices raised on or after July 1, 2017, and for which payments were received or were receivable on or after that date. Directions previously issued protecting the petitioners from depositing GST are no longer valid. Deductions made by respondents for invoices issued post-July 1, 2017, are lawful, and no writ will be issued to release such deducted amounts. However, petitioners can claim release of deducted amounts if they can demonstrate to the authorities, in terms of the aforementioned circular, that invoices were raised before July 1, 2017. Regarding the claim for enhancement of contract value under Section 64A of the Act of 1930 due to GST applicability, the Court found insufficient materials to decide. Petitioners are granted liberty to submit representations to the awarding authorities with supporting materials, and these representations must be considered within six months. The Court also noted that Section 171 of the Act of 2017 and CGST would need consideration in cases of tax rate reduction or input tax credit benefits, entitling recipients to commensurate price reductions.

Facts

A batch of seven writ petitions before the Gauhati High Court concerned the applicability of the Assam Value Added Tax Act, 2003 (Act of 2003) versus the Assam Goods and Service Tax Act, 2017 (Act of 2017). The petitioners were awarded contracts prior to the implementation of the Act of 2017, but their bills and payments were processed after its commencement. The core dispute revolved around whether GST was leviable on these post-Act of 2017 invoices and payments, and if so, whether the petitioners could claim the additional tax burden from the respondent authorities. The petitioners sought to avoid GST liability or claim reimbursement for the tax paid.

Key Issues

1. Whether the deduction of tax in respect to the petitioners should be made under the Assam Value Added Tax Act, 2003, or the Assam Goods and Service Tax Act, 2017, considering contracts were awarded before the latter's commencement but bills and payments were made thereafter. Petitioner's contention: The petitioners argued that since the contracts were entered into prior to the Act of 2017, the older tax regime should apply, or alternatively, they should not be liable for GST on payments made post-implementation. Revenue's contention: The State authorities contended that for invoices and payments made after the Act of 2017 came into effect, GST would be applicable. 2. If the petitioners are liable to pay GST, do they have a right to claim the additional tax in the form of GST from the respondent authorities? Petitioner's contention: The petitioners sought to claim the additional tax burden from the respondents, likely relying on principles that allow for price adjustments due to changes in tax incidence. Revenue's contention: The judgment does not explicitly record the revenue's specific arguments on this point, but their actions of deducting GST suggest they did not agree with the petitioners' claim for reimbursement.