M/S Techno Electric And Engg Co LTD Through Shri Dinesh Parakh 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. The Court found this action to be arbitrary, violative of the contract terms, and contrary to their own agreement. The Court reasoned that in view of the introduction of GST during the continuance of the ongoing contract, the liability to pay GST should be that of the Respondent JBVNL, as per the amended work order incorporating the GST impact. The Court relied on various Supreme Court judgments, including UOI Vs. Tantia Construction Pvt. Ltd., Popatrao Vyankatrao Patil v. State of Maharashtra, ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., Unitech Limited Vs Telengana State Industrial Infrastructure Corporation (TSIIC), Kumari Shrilekha Vidyurthi Vs. State of Uttar Pradesh, and Food Corporation of India vs Kamdhenu Cattle Feed Industries, to establish that State actions, even in contractual matters, must be fair, just, reasonable, and non-arbitrary, adhering to Article 14 of the Constitution. The Court directed JBVNL to calculate and pay the withheld amount from September 2019 till the date of actual payment, along with statutory interest, within 12 weeks. The issue of reimbursement of TDS was implicitly covered under the direction to pay the withheld amount and GST impact.

Facts

The petitioner, M/s. Techno Electric And Engineering Company Limited, entered into a contract with Jharkhand Bijli Vitran Nigam Limited (JBVNL) for rural electrification under the Deen Dayal Upadhyay Gramin Jyoti Yojna. The contract's General Conditions of Contract (GCC) stipulated that the contract price was based on prevailing taxes, and any increase or introduction of new taxes during the contract's performance would lead to an equitable adjustment of the contract price. Following the introduction of GST, JBVNL began withholding the GST impact from the petitioner's bills from September 2019. The petitioner contended that this action was arbitrary and contrary to the contract terms, as the amended work order incorporated the GST impact, making JBVNL liable for it. The petitioner also claimed entitlement to reimbursement of GST paid and TDS deposited by JBVNL on GST.

Key Issues

1. Whether the action of the Respondent (JBVNL) in withholding the GST impact while paying bills from September 2019 onwards is arbitrary and violative of Article 14 of the Constitution of India, considering the contractual terms regarding equitable adjustment of contract price due to changes in taxes? The petitioner argued that the amended work order, read with the bid document, clearly placed the GST liability on the respondents, especially since the contract was ongoing when GST was introduced. They relied on the principle of promissory estoppel and the contractual obligation to adjust the price equitably. The respondents' arguments are not explicitly recorded in the provided text, but their action of withholding payment implies a contention that they are not liable for the GST impact. 2. Whether the petitioner is entitled to reimbursement of GST along with statutory interest, and also reimbursement of TDS deposited by the respondents on CGST and SGST, based on the contract and the introduction of GST? The petitioner contended that they have discharged the GST liability out of their own pocket and that the respondents' withholding of these amounts is illegal and amounts to double penalization. They asserted entitlement to interest and reimbursement of TDS.