M/S Makkar Construction Company vs. Panjab University And Another

Held

The Court held that the petitioner is not entitled to a refund of ₹32 lacs paid on account of GST. The reasoning was that GST, introduced on July 1, 2017, is not a new tax but an amalgamation of existing taxes like VAT, Sales Tax, and Service Tax, which the contractor was already liable to pay under the terms of the contract. Condition No. 3 of the letter of award and condition No. 63 of the DNIT clearly stipulated the petitioner's responsibility for paying these taxes. Furthermore, the Court noted that post-GST implementation, the contractor is entitled to claim input tax credit on the tax paid on input goods and services, which mitigates their burden. The University's stance, as reflected in the rejected claim, was found to be in line with these contractual obligations. Therefore, no infirmity was found in the University's decision to reject the refund claim. The petition was dismissed as devoid of merits.

Facts

The petitioner, M/s Makkar Construction Company, filed a writ petition challenging an order dated June 28, 2019, passed by Panjab University (respondent No. 1). This order disposed of the petitioner's representation seeking a refund of ₹32 lacs paid on account of GST. The dispute arose from a construction contract for Girls Hostel No. 10 (2nd phase) at Panjab University. The petitioner's tender was accepted, and a letter of award was issued. The University's rejection of the refund claim was based on conditions within the tender documents and the letter of award, which stipulated the petitioner's liability for various taxes, including GST, and the University's non-entertaining of such claims.

Key Issues

1. Whether the petitioner is entitled to a refund of ₹32 lacs paid on account of GST, considering the terms of the tender and letter of award, and the nature of GST as an amalgamation of existing taxes (VAT, Sales Tax, Service Tax)? The petitioner argued that the GST paid should be refunded. The revenue, represented by Panjab University, contended that GST is not a new tax but an amalgamation of existing taxes that the contractor was already liable to pay as per the contract conditions. They further argued that after the implementation of GST, the contractor became eligible to claim input tax credit on inputs used for the contract. The University relied on condition No. 3 and condition No. 9 of the letter of award, and condition No. 63 of the Detailed Notice Inviting Tender (DNIT), which explicitly stated the petitioner's liability to pay service tax, VAT, sales tax, purchase tax, or any other tax on material, and that the University would not entertain any such claims.