M/S Abb Constructions vs. Asst Commissioner Of Local Goods And Service Tax

Learned counsel for the petitioner submits that non-payment of the Goods and Services Tax (GST), prejudices the interest of the petitioner insofar as the same would be an additional liability that was required to be borne by the petitioner and would eat into the profit margin that was made out while accepting the bid of the petitioner. The petitioner has relied on observations made in W.P.No.9721/2019 and submits that the present petition may be disposed off on same terms.

Learned counsel Sri. Shamanth Naik appearing for respondent No.1 submits that the order in W.P.No.9721/2019 and connected matters is sought to be appealed.

Perused the order passed in W.P.No.9721/2019 and observations at paragraph No.20 are as follows:

In the result, I pass the following:- ORDER (i) Petitions are hereby disposed of. NC: 2024:KHC:3786 (ii) The Respondents-State and other Govt agencies/Respondents who have entered into works contract with the Petitioners are issued the following directions / guidelines:- (a) Calculate the works executed pre-GST (prior to 01.07.2017) under KVAT regime and payments received by the Petitioners. (b) The payments received by the Petitioners pre- GST for such of the works executed before 01.07.2017 are to be assessed under KVAT tax regime – either under COT or VAT scheme as applicable. (c) Calculate the balance works to be completed or completed after 01.07.2017, in the original contract. (d) Derive the rate of materials, KVAT items required or used to complete the balance works. (e) Deduct the "KVAT" amount from those materials and the service tax, if applicable. (f) Add the applicable "GST" on those items. (g) Input Credit on the materials is to be arrived at and be set off as against the output GST, for those assessed under regular VAT. (h) Further, the “tax difference” should be calculated on such balance works executed or to be executed after 01.07.2017 separately. NC: 2024:KHC:3786 (i) Based on the result obtained on calculation of the tax difference on the contract value, concerned department/authority has to decide whether agreement needs to be changed or not. (j) A supplementary agreement may be signed with the Petitioners for the revised GST-inclusive work value for the Balance Work completed or to be completed as determined above and in case the revised GST-inclusive work value for the Balance Work, completed or to be completed after 01.07.2017, is more than the original agreement work value, the Petitioners are to be paid /reimbursed, as the case may be, the differential tax amount by the concerned employer; so also, in case payments for works completed pre-GST are made post-GST, the concerned employer has to pay or reimburse, as the case may be, the differential tax amount, to the Petitioners. (iii) Petitioners are directed to submit comprehensive representations to the respective employers/Respondents within a period of 4 weeks from the date of receipt of a copy of this order, irrespective of whether they have completed the works pre-GST or post-GST or payments were received or yet to be received post-GST. (iv) If such representations are submitted, the respective employers/Respondents are directed to NC: 2024:KHC:3786 consider and dispose of the same in the light of the aforesaid directions / guidelines as expeditiously as possible and at any rate within a period of 8 weeks from the date of submission of the representations. (v) In view of the interim orders passed by this Court in the present petitions, such of the petitioners who had not filed their GST returns during the period after 01.07.2017 are permitted to file their returns / amended returns, pursuant to the calculation of the differential tax as per procedure above under GST regime, without insisting on interest or penalty or limitation. (vi) The GST authorities are also directed not to take precipitative action against the Petitioners for a period of 6 months from the date of receipt of a copy of this order. (vii) Liberty is reserved in favour of the petitioners to challenge any order / decision passed / taken by the respondents or the authorities, subsequent to this order and also take recourse to such remedies as available in law."

In light of the same and taking note that the earlier order in MAS Constructions V. Hubbali Dharwad Smart City Pvt., Ltd., in W.P.No.2084/2021 is passed on NC: 2024:KHC:3786

2021 and has not been appealed against, the present petition requires to be disposed off in terms of the order passed in W.P.No.9721/2019 as directed in paragraph No.20 referred to above.

Accordingly, the pre-intimation notice at Annexure-‘G’, Summary of Show Cause Notice at Annexure-‘H’ and impugned order under Section 73(9) of the Act at Annexure-‘J’ as well as impugned order at Annexure-‘K’ are set aside and writ of mandamus is issued in terms of observations made in W.P.No.9721/2019 as prayed for, at prayer-(e).

Accordingly, respondent No.2 is directed to enter into necessary Supplementary Tender Agreement as is permissible in terms of the observations made in W.P.No.9721/2019. Needless to state that this order would be subject to any order in appeal against the order passed in W.P.No.9721/2019. If that were to be so, the notice at Annexures-‘G’ and ‘H’ would stand revived. NC: 2024:KHC:3786

In light of the contentions raised by the learned counsel for the petitioner, it is clarified that in the event of any order passed in the appeal against the order in W.P.No.9721/2019, the order passed on this date setting aside Annexures-‘G’ and ’H’ would not have the effect of defeating such notices or the order under Section 73(9) of the Act which would stand revived. Accordingly, the apprehension of the revenue as regards limitation is taken care of appropriately. Accordingly, the petition is disposed off and all contentions are kept open. JUDGE MCR