Satyendra Kumar Construction PVT. LTD. 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 awarded 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. Upon hearing the parties, 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 petitioners' grievances had been redressed. The petitioners' counsel agreed that if this clause was followed by all work 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. 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 writ petitions challenging the burden of paying GST on works allotted to them based on Schedule of Rates (SOR) that did not account for GST implications. They argued that the contract values, determined pre-GST, did not include the GST component, leading to a differential amount they were being asked to pay. The State Government contended that payments were being made after deducting applicable GST, and that the Commercial Taxes Department had issued notifications and guidelines to address these issues. The core of the dispute revolved around how the GST impact was to be factored into contract payments for works executed after the GST regime commenced.

Key Issues

1. Whether the petitioners are legally obligated to bear the GST burden on works awarded based on pre-GST Schedule of Rates (SOR), when the original contract value did not account for GST implications? (Question of law) Petitioner's Argument: The petitioners argued that they should not be burdened with paying GST on works where the original contract price, determined using pre-GST SOR, did not include any provision for GST. They contended that the State was not deducting the subsumed taxes from the original contract price to arrive at the actual 'cost of the project' and that the issued guidelines were not clarifying the issue. They sought redressal for the differential amount arising from GST implementation. Revenue/State's Argument: The State submitted that payments for works executed after July 1, 2017, were being 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 relevant circulars and guidelines. They also agreed to provide SORs for pre- and post-GST works.