M/S. Satyendra Prasad vs. The State Of Bihar

Held

The Court held that the petitioner's reliance on the judgment in CWJC No. 1452 of 2019 was misplaced because, in the present cases, the tendering process and the execution of agreements occurred after the Goods and Services Tax Act came into force. Specifically, the agreements were executed on 12.07.2018, well after the GST Act's commencement on 01.07.2017. The Court found that Clause 35 of the Standard Bidding Documents (SBD) clearly stipulated that all quoted rates were inclusive of taxes and levies payable under the respective statutes. Therefore, the petitioner had bid with full awareness of the tax liability under the GST Act and could not escape this liability or claim it should be borne by the awarding department. The Court also clarified that Section 76 of the BGST Act was not applicable as it pertains to situations where tax is collected without existing taxability, not to a contractor's liability to pay tax they are entitled to collect. The Court followed the reasoning in a similar case, JMC Construction Private Ltd. vs. The Union of India and Others, and rejected the writ petitions.

Facts

The petitioner, M/s. Satyendra Prasad, is a proprietorship firm that participated in tenders and executed works contracts for the Rural Works Department and Road Construction Department of the Government of Bihar. The writ petitions concern assessments for various months between November 2018 and June 2019. The petitioner's contention is that they quoted tender rates applicable under the Bihar Value Added Tax Act, 2005, but were subsequently subjected to tax liability under the Bihar Goods and Services Tax Act, 2017, resulting in an escalation of tax from 4% to 12%. The petitioner argued that the tax liability should fall on the awarding department, not on them, and that they cannot be mulcted with this liability. The State, represented by the Commercial Tax Department, is the respondent.

Key Issues

1. Whether the petitioner can claim reimbursement for the differential tax rate escalation from the Bihar VAT Act to the BGST Act, given that the tendering process and agreements were executed after the GST Act came into force? 2. Whether Section 76 of the BGST Act applies to the petitioner's situation, and if so, what is its implication on the petitioner's liability to pay tax? Petitioner's Arguments: The petitioner contended that they quoted rates applicable under the Bihar VAT Act, 2005, and that the tax liability should be borne by the awarding department (Rural Works Department). They relied on a previous judgment in CWJC No. 1452 of 2019 (M/s. Jai Bhawani Construction vs. the Union of India and Others) and Clause 35 of the Standard Bidding Documents (SBD), as well as Section 76 of the VAT Act. Revenue's Arguments: The revenue argued that the tendering process and agreements were executed after the GST Act came into force (01.07.2017), and Clause 35 of the SBD explicitly states that all rates are inclusive of taxes and levies payable under the respective statutes. They also contended that Section 76 of the BGST Act is not applicable in this scenario as it deals with amounts collected as tax when taxability does not exist, not with the liability of a contractor to pay tax they are entitled to collect.