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 with 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 hearing arguments, the Court was informed of Clause (vii) of the minutes of a meeting held on 12.12.2018, which is part of Annexure 'D' to the State's counter-affidavit. This clause indicated that the petitioners' grievances had been redressed. The petitioners' counsel agreed that if Clause (vii) of the minutes of the Rural Works Department meeting was followed by all other works departments of the Government of Bihar, their grievances would be considered redressed. The State counsel unanimously submitted that the petitioners should have no doubt regarding the decision in Clause (vii), which was based on revised SORs. 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 them bearing the tax burden. The State Government, through various departments, was responsible for issuing these SORs. The petitioners contended that the original contract price should be adjusted by deducting subsumed taxes to arrive at the actual 'cost of the project' before GST, and that the State was not undertaking this exercise. The State argued that there was no difficulty in redressing grievances, citing a notification and stating that payments were to be made after deducting CGST and SGST with effect from a later date. The court was also asked to consider the SORs for works tendered before and after GST implementation.

Key Issues

1. Whether the State Government, in the absence of a supplemental agreement with a revised contract value, is deducting the subsumed taxes from the original contract price to arrive at the actual 'cost of the project' for works executed prior to GST implementation? (Question of mixed law and fact, concerning the interpretation and application of contract terms and GST provisions). Petitioner's Argument: The State Government is not performing the necessary exercise of deducting subsumed taxes from the original contract price to determine the 'cost of the project' before GST. This leads to confusion and the petitioners bearing the GST burden on works awarded on pre-GST SORs. They rely on Annexure 'C' (guideline) and Annexure 'E' (letter no. 2594 dated 25.07.2017) which they claim do not clarify the issue. Revenue/State's Argument: There is no difficulty in redressing the grievances. For works executed after 01.07.2017, payments are made after deducting 1% CGST and 1% SGST. The Commercial Taxes Department issued Notification dated 13.09.2018 in terms of Section 51 of the GST Act. Reimbursement of tax liabilities is dealt with by the Act, and Executive Engineers have been directed to entertain claims in light of circulars and guidelines.