M/S Ashoka Buildcon Limited, Through Its Authorised Representative, Mr. Md. Mohsin Alam vs. The State Of Jharkhand, Through The Department Of Energy

Held

The Court held that the action of Respondent JBVNL in withholding the GST impact was arbitrary and unreasonable. The Court relied on its previous judgment in Sri Gopikrishna Infrastructure Pvt. Ltd. Vs. The State of Jharkhand and Others, which dealt with similar facts and issues. The Court found that the nature of the work awarded to the petitioner was the same as in the cited case, and the execution of the work was in progress when the amendment in Clause 10.7 of the GCC was made. Therefore, the benefit of the amended Clause 10.7 of the GCC could not be denied to the petitioner if the GST regime was introduced during the performance of the contract. The Court concluded that firms awarded contracts prior to July 1, 2017, are entitled to reimbursement of the GST impact, including on indirect transactions. The objection raised by the respondents regarding the applicability of the Sri Gopikrishna Infrastructure judgment was found to have no basis. Consequently, the writ petition was allowed, with costs of Rs. 50,000/- to be paid by the respondents to the petitioner. The Court did not expressly leave any issue undecided.

Facts

The petitioner, M/s Ashoka Buildcon Limited, filed a writ petition seeking a declaration that Jharkhand Bijli Vitran Nigam Limited (JBVNL) acted arbitrarily in withholding GST impact amounting to Rs. 19,86,44,336/- for Ranchi and Medininagar projects under the Integrated Power Development Scheme (IPDS). The petitioner argued that JBVNL was bound by circulars mandating payment of increased contract price due to GST introduction, including for bought-out transactions and sales in transit, and that similar benefits were extended to other contractors. The petitioner also contended that under the GST regime, the liability to pay GST falls on the employer upon supply of goods. The letters of award were issued before the GST regime commenced on July 1, 2017, and JBVNL began withholding payments from November 2017 onwards.

Key Issues

1. Whether the action of Respondent JBVNL in withholding the GST impact of Rs. 19,86,44,336/- in respect of the Ranchi and Medininagar Projects under the IPDS is arbitrary and unreasonable, considering JBVNL was bound by circulars mandating payment of GST impact on the entire contract, including bought-out transactions/sales in transit, and similar benefits were extended to other contractors (as per the petitioner's arguments)? 2. Whether, in view of the introduction of GST during the continuance of the ongoing Contract, the liability to pay GST lies with the Respondent Employer, as the GST regime places the liability on 'supply' of goods when the Petitioner supplied them to Respondent JBVNL (as per the petitioner's arguments)? The petitioner argued that JBVNL's action was arbitrary and unreasonable, citing binding circulars and parity with other contractors. They also argued that the employer is liable for GST under the new regime. The respondents' specific arguments are not explicitly detailed in the judgment, but their counter-affidavit questioned the applicability of a previous judgment to the present case.