M/S. Brijnandan Singh Through Its Partner Brijnandan Singh vs. The Union Of INDIA And Ors

Held

The Court noted that initially, the petitioners' grievance was that the SORs did not account for GST implications, leading to them bearing the tax burden. The State counsel submitted that a notification dated 13.09.2018, in terms of Section 51 of the GST Act, and directions issued to Executive Engineers to entertain claims in light of circulars and guidelines, addressed the issue. Crucially, Clause (vii) of the minutes of the meeting held on 12.12.2018 of the Rural Works Department was brought to the court's attention. The petitioners' counsel agreed that if this clause 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), based on which the SOR had already been revised. The Court found that with the SOR revised to take note of GST implications and the agreement on following Clause (vii) of the meeting minutes, there was nothing left for adjudication, as the petitioners' grievances were deemed redressed. The bound copies of the SOR (before and after GST) were to be kept on record.

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 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's Commercial Taxes Department issued letters and notifications, including one dated 25.07.2017, which the petitioners argued did not clarify the issue. The State contended that payments for works executed after 01.07.2017 were to be made after deducting CGST and SGST, and that the GST Act provided mechanisms for reimbursement. A key development was a meeting of the Rural Works Department on 12.12.2018, the minutes of which were brought to the court's attention.

Key Issues

1. Whether the petitioners are being burdened to pay GST on works allotted based on SORs that did not account for GST implications, and if so, what is the mechanism for redressal? (Question of mixed law and fact, concerning the interpretation and application of contract terms and GST provisions). Petitioner's contention: The petitioners argued that the original contract price, based on pre-GST SORs, did not include GST, and the State was not deducting the subsumed taxes to arrive at the actual 'cost of the project'. They relied on guidelines and a letter dated 25.07.2017 from the Commercial Taxes Department, which they found unclarifying. They sought redressal for the differential amount arising from GST implementation. Revenue/State's contention: The State submitted that for works executed after 01.07.2017, payments were to be made after deducting CGST and SGST. They referred to a notification dated 13.09.2018 in terms of Section 51 of the GST Act and stated that the Act provided for reimbursement of tax liabilities. They also pointed to Clause (vii) of the minutes of a meeting held on 12.12.2018 as a means of redressing the petitioners' grievances.