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

Held

The Court noted that the petitioners' primary grievance was the payability of the differential amount arising from the implementation of GST on contracts where the original SOR did not account for it. During the proceedings, Clause (vii) of the minutes of a meeting held on 12.12.2018, pertaining to the Rural Works Department, was brought to the Court's attention. The petitioners' counsel agreed that if this clause were 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 there was nothing left for adjudication as the petitioners' grievances were deemed redressed.

Facts

The petitioners, M/s. Jai Bhawani Construction and others, filed multiple writ petitions challenging the imposition of Goods and Services Tax (GST) on contract works. Their 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's Commercial Taxes Department issued letters and notifications, which the petitioners argued did not clarify the issue. The State contended that payments for works executed after July 1, 2017, were to be made after deducting CGST and SGST, and that the GST Act provided for reimbursement of tax liabilities. The Court was asked to consider the SORs for pre-GST and post-GST works.

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, thereby requiring them to pay a differential amount? (Question of law and fact, concerning the interpretation and application of contract terms and GST provisions). Petitioner's Argument: The petitioners argued that they were being unfairly burdened with GST on contracts where the original rates did not incorporate GST. They sought clarity on how to handle the differential amount arising from the GST implementation and contended that the State's approach, particularly the letter dated 25.07.2017, did not resolve the confusion. Revenue/State's Argument: The State argued that there was no difficulty in addressing the petitioners' grievances. They stated that for works executed post-July 1, 2017, payments would be made after deducting CGST and SGST. They also referred to a notification dated 13.09.2018, issued under Section 51 of the GST Act, and claimed that the Act provided for reimbursement of tax liabilities. The State also agreed to provide SORs for pre- and post-GST works.