M/S Jai Bhawani Construction vs. The Union Of INDIA And Ors

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 its implementation. The Court was informed of Clause (vii) of the minutes of a meeting held on 12.12.2018, which indicated that the petitioners' grievances had been redressed. The petitioners' counsel agreed that if this clause was followed by all works departments of the Government of Bihar, their grievances would be considered settled. 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, including M/s. Jai Bhawani Construction and Satyendra Kumar Construction Pvt. Ltd., filed writ petitions challenging the burden of Goods and Services Tax (GST) on works allotted to them based on Schedule of Rates (SOR) that did not account for GST implications. They argued that the contract value, determined pre-GST, was being used to calculate GST, leading to a financial burden. The State Government's approach of not deducting subsumed taxes from the original contract price to arrive at the 'cost of the project' and the issuance of letters by the Commercial Taxes Department were also points of contention. The State contended that there was no difficulty in redressing grievances, and payments were to be made after deducting CGST and SGST, with a notification issued in terms of Section 51 of the GST Act.

Key Issues

1. Whether the petitioners are being burdened to pay GST on works allotted on the basis of SORs that did not account for GST implications, leading to a grievance regarding the payability of differential amounts arising from GST implementation? (Mixed question of law and fact, concerning contract interpretation and GST applicability). Petitioner's Arguments: The petitioners argued that the original contract price, determined pre-GST, was being used for GST calculations, causing them financial hardship. They contended that the State was not deducting subsumed taxes from the original contract price to determine the 'cost of the project' and that subsequent departmental letters did not clarify the issue. They sought redressal for the differential amount arising due to GST implementation. Revenue/State's Arguments: The State argued that there was no difficulty in addressing the petitioners' grievances. They submitted that for works executed post-GST, payments were to be made after deducting CGST and SGST. They referred to a notification issued under Section 51 of the GST Act and stated that directions had been issued to Executive Engineers to entertain claims in light of relevant circulars and guidelines. They also agreed to provide SORs for pre- and post-GST works.