Larsen And Toubro Limited Through Its Authorized Signatory Mr Anand R vs. State Of Jharkhand Through The Deptt Of Energy

Held

The Court held that the respondents were not justified in withholding the amount of GST impact. It found this action to be arbitrary and contrary to the terms of the agreement. The Court relied on a previous judgment of the same High Court in W.P.(T) No. 4885 of 2022 and its analogous cases. Consequently, the Court ruled that in view of the introduction of GST during the continuance of the ongoing contract, the liability to pay GST shall be that of the Respondent JBVNL, as per the amended work order incorporating the GST impact. The matter was remitted back to Respondent JBVNL to calculate and pay the withheld amount deducted from various bills of the petitioner(s) since September 2019 until the date of actual payment. The petitioner(s) were held entitled to reimbursement of GST along with statutory interest in terms of the GST Act, 2017, and the Rules framed thereunder. The Court directed that the entire exercise be completed within 12 weeks from the receipt of the order.

Facts

The petitioner, Larsen & Toubro Limited, filed multiple writ petitions challenging the action of the respondents, primarily Jharkhand Bijli Vitran Nigam Limited (JBVNL) and its officials, in withholding the Goods and Services Tax (GST) impact while paying invoices from September 2019 onwards. The petitioner contended that this action was arbitrary and contrary to the contract terms. The respondents, including the State of Jharkhand and its tax authorities, were also made parties. The core of the dispute revolves around who bears the GST liability for ongoing contracts after the introduction of GST. The petitioner argued that the amended work order incorporated the GST impact, making the respondents liable.

Key Issues

1. Whether the respondents were justified in withholding the amount of GST impact on invoices from September 2019 onwards, considering the introduction of GST during the continuance of an ongoing contract? (Question of law) Petitioner's arguments: The petitioner argued that the respondents' action was arbitrary, violative of the doctrine of promissory estoppel, and contrary to Article 14 of the Constitution. They contended that the amended work order, read with the bid document, incorporated the GST impact, making the respondents liable for its payment. The petitioner also claimed entitlement to interest on the withheld GST amount, as they had discharged this liability from their own funds and it was reflected on the State GST portal. Furthermore, they argued for reimbursement of GST due to the respondents depositing Tax Deducted at Source (TDS) on CGST and SGST at 1% each of the gross value of the GST invoice from September 1, 2018. Respondents' arguments: The learned AAG-II did not dispute the petitioner's submissions regarding the applicability of a previous judgment but stated that the said judgment was under challenge before the Supreme Court.