M/S Pinki Construction And Anr. vs. The Executive Engineer, North Bengal Development Department
Original PDF →Facts
The petitioner, M/s Pinki Construction & Anr., a firm registered under the CGST and WBGST Acts, sought a mandamus from the High Court at Calcutta directing the respondents, including the Executive Engineer, North Bengal Development Department, to remit the Goods and Services Tax (GST) on Works Contract Services provided on or after July 1, 2017. The petitioner contended that the respondent authorities incorrectly applied paragraph 3(iv) of a notification, which they argued was confined to pre-GST contracts, to deny reimbursement for post-GST contracts governed by paragraph 4 of the same notification. The petitioner also argued that the denial of GST reimbursement was arbitrary and discriminatory, violating Article 14 of the Constitution. The tax period in dispute pertains to the period from July 1, 2017, to March 31, 2019. The petitioner had made payments of GST from their own pocket.
Held
The Court held that the respondent authorities had misconstrued the applicability of the notification. The Court found that paragraph 3(iv) of the Notification dated August 16, 2017, is confined to pre-GST contracts and cannot be invoked to deny reimbursement for contracts executed after July 1, 2017, which are expressly governed by paragraph 4 of the same notification. The Court noted that paragraph 4 clearly states that for post-GST contracts or ongoing projects where estimates were approved before July 1, 2017, GST rates will be applicable, and suppliers must pay CGST and WBGST. The Court also observed that the question of revising contractual values due to the change from VAT/Service Tax to GST does not arise as per the notification. The Court did not go into the merits of the case but directed respondent No. 4, The Additional Chief Secretary, North Bengal Development Department, to revisit the issue of reimbursement of the GST component for the period from July 1, 2017, to March 31, 2019, in light of paragraph 4 of the notification. A reasoned order was to be passed after giving the petitioner an opportunity of hearing, preferably within six weeks.
Key Issues
1. Whether paragraph 3(iv) of the Notification dated August 16, 2017, can be invoked to deny GST reimbursement for works contract services executed after July 1, 2017, when paragraph 4 of the same notification expressly governs post-GST contracts? (Question of law) 2. Whether the action of the respondent authorities in denying GST reimbursement to the petitioner is arbitrary, unreasonable, and discriminatory, violating Article 14 of the Constitution of India? (Question of mixed law and fact). Petitioner's arguments: The petitioner argued that paragraph 3(iv) of the notification is applicable only to pre-GST contracts and cannot be used to deny reimbursement for contracts executed after July 1, 2017, which are governed by paragraph 4. They further contended that the denial of reimbursement is arbitrary and discriminatory, violating Article 14 of the Constitution. The petitioner relied on the judgment in Sushil Kumar Thard v. National Jute Manufactures Corporation Limited & Ors., affirmed by the Supreme Court in National Jute Manufactures Corporation Limited v. Sushil Kumar Thard, which held that State instrumentalities must act fairly and reasonably. Revenue/State's arguments: The Learned Counsel for the State was unable to contradict the submissions made by the petitioners.
Sections Cited
Section 14
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT AT CALCUTTA Constitutional Writ Juri iction (APPELLATE SIDE)
Present: The Hon’ble Justice Smita Das De
W.P.A. No. 875 of 2022
M/s Pinki Construction & Anr. Vs. The Executive Engineer, North Bengal Development Department & Ors.
Smita Das De, J.:-
The petitioner seeks a mandamus directing inter alia, the respondents to remit the amount of the GST on Works Contract Services provided on or after July 1, 2017. The petitioner in the instant case is the partnership firm registered under the CGST Act and WBGST Act. For the petitioner : Mr. Vinay Shraff,
: : : : : Mr. Himangshu Kumar Ray, Ms. Shiwani Shaw, Ms. Swarnwarshi Poddar, Mr. Animitra Roy, Mr. Anish Mandal.
For the State : : : :
Mr. Anirban Ray, Ld. GP, Mr. Md. T.M. Siddiqui, Ld. AGP., Mr. Tanoy Chakraborty, Mr. Saptak Sanyal.
Reserved on : 16/05/2025 Judgment on : 23/05/2025
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The case made out by the petitioner is that the respondent authorities have failed to appreciate that paragraph 3 (iv) of the Notification is confined in its application to Pre-GST contracts and cannot be invoked to deny reimbursement in respect of contracts executed after July 1, 2017 which are expressly governed by paragraph 4 of the very same Notification.
It is further submitted that the action of the respondent in denying GST reimbursement to the petitioners is arbitrary, unreasonable and discriminatory violating the mandate of the Article 14 of the Constitution of India which is contrary to the principle of equality before the Law and equal protection of the Laws.
The Learned Advocate for the petitioner relies upon a judgment of this Hon’ble High Court in the case of Sushil Kumar Thard v. National Jute Manufactures Corporation Limited. & Ors. (WPA 4751 of 2023) which was subsequently affirmed by the Hon’ble Supreme Court in the case of National Jute Manufactures Corporation Limited v. Sushil Kumar Thard SLP(C) 25436 of 2023 wherein it has been held that even on contractual matters, the State and its instrumentalities are bound to act fairly, reasonably and in a non-arbitrary manner.
The Learned Counsel for the State is unable to contradict the submissions made by the petitioners.
Having heard both the parties and considering the materials available on record I am of the view that as per the notification dated August 16, 2017, the question of revision of any contractual values of the contract due
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to impact of change of tax rate with regard to VAT/ Service Tax to GST does not arise at all.
From the plain reading of the Paragraph 4 of the Notification in question it clearly envisages that: “With regard to post-GST contracts or ongoing project where estimates have been approved before 1st of July 2017 then in those work order can be given for supply of goods or service or both work contract, GST rates will be applicable. In other words the suppliers of goods/services or both has to pay WBGST and CGST on all taxable goods / services.”
In the light of the above Notification, the respondent authority has misconstrued the applicability of the Notification in the context of the instant case. The respondents have failed to appreciate that Paragraph 3(iv) of the Notification is confined in its application to pre-GST contract and cannot be invoked to deny reimbursement in respect of contracts executed after July 1, 2017 which are expressly governed by Paragraph 4 of the same notification.
In view of the aforesaid, I direct the respondent No. 4, The Additional Chief Secretary, North Bengal Development Department to revisit the issue of the petitioner as mentioned in the letters dated October 19, 2020 and April 23, 2021 respectively with regard to the payment of the GST amount against the gross bill during the period from 01.07.2017 to 31.03.2019 as per GST Law. However, it is made clear that I have not gone into the merits of the case but since the petitioner has already made payment of the GST
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amount against the gross bills for the period 01.07.2017 to 31.03.2019 out of their own pocket, hence, I direct the respondent No. 4 to consider the issue of reimbursement of the GST component in the light of Paragraph 4 of the Notification dated August 16, 2017 being Notification No. 5050-F(Y) and shall pass a reasoned order in accordance with law upon giving opportunity of hearing to the petitioner preferably within a period of six weeks from the date of communication of the order.
With the above observations and directions, the writ petition being WPA 875 of 2022 stands disposed of. No order as to costs.
Urgent certified copy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(Smita Das De, J.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.