M/S. Brijendra Kumar Singh vs. The Union Of INDIA

Held

The Court noted that the petitioners' initial grievance was that they were being burdened to pay GST on works allotted based on SORs that did not account for GST implications. The issue was not the rate of GST itself, but the payability of the differential amount arising from GST implementation. Upon production of the revised Schedule of Rates (SOR) for both pre-GST and post-GST works, it became evident that the implications of GST were now considered, and the basic rate applicable after GST's enforcement was fixed. Both parties agreed that with the revised SOR, there was no issue regarding GST implications on works executed post-GST. Furthermore, Clause (vii) of the minutes of a meeting held on 12.12.2018, brought to the Court's notice, was stated to have redressed the petitioners' grievances. The State counsel unanimously submitted that the petitioners should have no doubt regarding the decision in Clause (vii), based on which the SOR was revised. Consequently, the Court found that nothing remained for adjudication as the petitioners' grievances were deemed redressed.

Facts

The petitioners, M/s. Jai Bhawani Construction and others, filed multiple writ petitions before the Patna High Court challenging the imposition of GST on contract works. Their primary grievance was that the Schedule of Rates (SOR) used for calculating contract values did not account for the implications of GST, leading to a burden on them to pay GST on rates that did not include it. The State Government's Commercial Taxes Department issued letters and notifications that did not clarify the issue. The petitioners argued that the original contract price should be reduced by the subsumed taxes to arrive at the actual 'cost of the project' before GST, but this was not being done. The State contended that there was no difficulty in redressing grievances, and payments were being made after deducting GST as per notifications.

Key Issues

1. Whether the State Government is correctly deducting subsumed taxes from the original contract price to arrive at the actual 'cost of the project' for GST calculation on works executed post-01.07.2017? 2. Whether the revised Schedule of Rates (SOR) adequately accounts for the implications of GST on contract works? Petitioner's arguments: The petitioners argued that the State Government was not deducting subsumed taxes from the original contract price to determine the 'cost of the project' for GST purposes. They relied on guidelines suggesting a revision of cost. They also pointed to a letter from the Commercial Taxes Department (Annexure 'E' series) that failed to clarify the issue. The petitioners' grievance was limited to the payability of any differential amount arising from the implementation of GST. Revenue/State's arguments: The State submitted that there was no difficulty in redressing the petitioners' grievances. They referred to a notification dated 13.09.2018, published on 01.10.2018, in terms of Section 51 of the GST Act, stating that payments for works executed after 01.07.2017 would be made after deducting 1% CGST and 1% SGST. They also indicated that directions had been issued to Executive Engineers to entertain claims in light of circulars and guidelines. The State agreed to produce SORs for pre-GST and post-GST works.