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

Held

The Court held that Circular No. 3/2017-GST dated August 24, 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 CGST for invoices raised on or after July 1, 2017, for which payments were received or were receivable on or after that date. Directions previously issued to deposit GST at 12% in such cases were deemed in accordance with law, and interim protection granted to petitioners no longer survives. Deductions made by respondents from bills for invoices issued on or after July 1, 2017, are also in accordance with the law, and no writ would be issued for their release. However, petitioners are entitled to the release of deducted amounts if they can demonstrate to the authorities, in terms of Circular No. 3/2017-GST, that invoices were raised before July 1, 2017. Regarding the claim for enhancement of contract value under Section 64A of the Act of 1930, the Court found the materials insufficient to decide the various aspects, including contract terms, price fixation, and tax burden shifting. The Court granted liberty to the petitioners to file representations before the awarding authorities with supporting materials, who shall consider the reimbursement claim within six months. The Court expressly left undecided the entitlement under Section 64A of the Act of 1930 due to insufficient material.

Facts

A batch of seven writ petitions were filed before the Gauhati High Court concerning the applicability of tax laws to contracts awarded before the Goods and Services Tax (GST) regime came into effect on July 1, 2017, but for which bills were raised and payments were made thereafter. The petitioners, primarily contractors, sought clarity on whether they should be taxed under the Assam Value Added Tax Act, 2003, or the Assam Goods and Services Tax Act, 2017. A related issue was whether they could claim the additional tax burden (GST) from the respondent authorities if they were found liable to pay GST on post-July 1, 2017, invoices and payments. The respondents included various departments of the Government of Assam, such as the Finance Department, Public Works Department, and tax authorities.

Key Issues

1. Whether the deduction of tax in respect of the petitioners should be made under the Assam Value Added Tax Act, 2003, or the Assam Goods and Services Tax Act, 2017, considering contracts were awarded prior to July 1, 2017, but bills and payments were made post that date. This issue also encompasses whether petitioners are liable for GST on invoices and payments raised and received after July 1, 2017. 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? Arguments for the Petitioners: The petitioners contended that since the contracts were awarded before July 1, 2017, the tax regime applicable should be the Assam Value Added Tax Act, 2003. They argued that any tax liability arising from bills and payments made post-July 1, 2017, should not be subject to GST, or alternatively, if GST is applicable, they should be allowed to claim the increased tax burden from the authorities, possibly invoking Section 64A of the Act of 1930 (likely referring to an earlier tax act, though not explicitly stated in this excerpt). They also relied on Circular No. 3/2017-GST dated August 24, 2017. Arguments for the Revenue/State: The respondents argued that for invoices and payments made after July 1, 2017, GST would be applicable as per the Act of 2017. They asserted that deductions made were in accordance with the law. The judgment does not explicitly record separate arguments for the revenue on the second issue, but their actions imply they resisted claims for reimbursement of GST.