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. The Court was informed of Clause (vii) of the minutes of a meeting held on December 12, 2018, which was part of Annexure 'D' to the State's counter-affidavit. This clause indicated that the grievance of the petitioners had been redressed. The learned counsel for the petitioners 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 grievance would be considered redressed. The State counsel unanimously submitted that the petitioners should have no doubt regarding the decision in Clause (vii), based on which the SOR had already been 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 Goods and Services Tax (GST) on contract works. Their primary grievance was that the Schedule of Rates (SOR) used for calculating payments did not account for the implications of GST, leading to them bearing the tax burden. The State Government, through various departments like the Rural Works Department and Road Construction Department, was the respondent. The dispute arose from contract works executed both before and after the GST implementation on July 1, 2017. The petitioners argued that the original contract price should be adjusted to reflect the subsumed taxes to arrive at the actual 'cost of the project'. The State contended that the issue was addressed through notifications and revised SORs.

Key Issues

1. Whether the State Government's practice of not deducting the subsumed taxes from the original contract price to arrive at the 'cost of the project' for GST-affected works is legally tenable, particularly when no supplemental agreement with a revised contract value is executed? (Question of law and fact, concerning the interpretation and application of GST provisions and contract principles). Petitioner's Arguments: The petitioners argued that the State was failing to deduct the subsumed taxes from the original contract price, leading to confusion and an unfair burden of GST. They relied on guidelines suggesting a revision of cost. They also pointed to a letter from the Commercial Taxes Department that did not clarify the issue. Revenue/State's Arguments: The State argued that there was no difficulty in redressing the grievances. They submitted that for works executed after July 1, 2017, payment was to be made after deducting 1% CGST and 1% SGST. They referred to a notification dated September 13, 2018, issued under Section 51 of the GST Act, and stated that directions had been issued to Executive Engineers to entertain claims in light of circulars and guidelines. They also agreed to produce SORs for pre- and post-GST works.