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

Held

The Court held that the petitioner's writ petitions were liable to be rejected. The Court found that the tendering process and the execution of the agreements for the works contracts occurred after the Goods and Services Tax Act, 2017, came into force on 01.07.2017. Specifically, the agreements were executed on 12.07.2018, which is significantly after the GST regime commenced. Clause 35 of the Standard Bidding Documents (SBD) 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 process with full awareness of the tax liability under the GST Act and cannot now claim that the tax liability is on the awarding department or that they have no liability to pay tax on the works carried out. 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 also noted that Section 76 of the BGST Act, relied upon by the petitioner, was not relevant to the facts of the case. The Court followed its own previous decision in CWJC No. 10122 of 2023 (JMC Construction Private Ltd. vs. The Union of India and Others) which dealt with a similar scenario.

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 are being subjected to tax liability at the higher rates applicable under the Bihar Goods and Services Tax Act, 2017. They argue that this tax liability should fall on the awarding department, not them, and that they cannot be mulcted with this escalated liability. The State contends that the tendering process and agreements were executed after the GST Act came into force, and the bid rates were inclusive of all applicable taxes.

Key Issues

1. Whether the petitioner can claim reimbursement or be absolved of GST liability when the tendering process and agreement execution occurred after the Goods and Services Tax Act, 2017, came into force, despite quoting rates applicable under the previous Bihar VAT Act, 2005? (Question of law turning on the interpretation of tender documents and GST provisions). Petitioner's arguments: The petitioner contended that they had quoted rates applicable under the Bihar VAT Act, 2005, and that the tax liability escalation to 12% under the BGST Act should not be borne by them but 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. Union of India) 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). Clause 35 of the SBD stipulated that all rates were inclusive of taxes and levies payable under respective statutes, implying the petitioner bid with full knowledge of GST liability. They also argued that Section 76 of the BGST Act was not applicable to the petitioner's situation.