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

Held

The Court held that the petitioner's claim for reimbursement of the differential tax rate escalation is unsustainable. The Court reasoned that the tendering process and the execution of the agreements occurred after the Goods and Services Tax Act, 2017, came into force on July 1, 2017. Specifically, the agreements were executed on July 12, 2018, which is significantly after the GST regime commenced. Clause 35 of the Standard Bidding Documents explicitly stated that all quoted rates were inclusive of taxes and levies payable under the respective statutes. Therefore, the petitioner had participated in the tender with full knowledge of the applicable GST rates and could not subsequently claim that the tax liability should be borne by the awarding department or that they were unaware of the increased tax burden. The Court distinguished the petitioner's reliance on the M/s. Jai Bhawani Construction judgment, stating it was not applicable as the tendering process in that case was prior to the GST Act. The Court followed the principle laid down in JMC Construction Private Ltd. vs. Union of India, emphasizing that rates quoted after the GST implementation must be inclusive of GST. The Court 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 Value Added Tax Act, 2005, to the Bihar Goods and Services Tax Act, 2017, for works contracts executed after the GST regime came into force? 2. Whether the petitioner, as a works contractor, is liable to pay GST on the works contracts, even if they did not factor the increased tax liability into their quoted tender rates? Petitioner's arguments: The petitioner contended that they quoted rates applicable under the Bihar VAT Act, 2005, prior to the implementation of the GST Act. They relied on a previous judgment (CWJC No. 1452 of 2019, M/s. Jai Bhawani Construction vs. Union of India) and Clause 35 of the Standard Bidding Documents (SBD). They argued that the tax liability should be borne by the awarding department and that they cannot be mulcted with the increased liability. They also relied on 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 (July 1, 2017). Clause 35 of the SBD stipulated that all rates were inclusive of taxes and levies payable under respective statutes, meaning the petitioner bid with full awareness of GST liability. Reliance was placed on a subsequent judgment by the same division bench (CWJC No. 10122 of 2023, JMC Construction Private Ltd. vs. Union of India).