M/S B M S Projects vs. State Of Chhattisgarh

Held

The Court disposed of the writ petition by directing the petitioner to submit a fresh claim to the respondent authorities, supported by cogent documents evidencing the payment of GST during the execution of the contract. The respondent authorities were directed to immediately process and scrutinize this fresh claim and take an appropriate decision within a period of 90 days from the date of receipt of the claim. The Court acknowledged the petitioner's submission regarding the contractual obligation for reimbursement of new taxes and the State's willingness to scrutinize the claim upon production of proof. The specific question of whether the respondents were contractually bound to reimburse the GST was not definitively decided but was remitted for fresh consideration upon submission of evidence.

Facts

The petitioner, M/s B M S Projects, a partnership firm, filed a writ petition seeking reimbursement of Goods and Services Tax (GST) paid on services rendered under contracts awarded by respondent departments for construction and maintenance of rural roads. The contracts were awarded under the old tax regime where service tax was not applicable. Following the introduction of GST, the petitioner became liable to pay GST. The petitioner contended that their quoted prices were exclusive of service tax, and as per the contract clause regarding 'New Tax', the Executive Engineer was obligated to reimburse such additional tax liability upon submission of proof. The petitioner had submitted a representation which remained pending, leading to the filing of this writ petition.

Key Issues

1. Whether the respondents are liable to reimburse the petitioner for the GST paid on services provided under contracts awarded prior to the introduction of GST, as per the contractual terms regarding 'New Tax'? (Question of law and fact, turning on the interpretation of contract clauses and the GST regime). Petitioner's arguments: The petitioner argued that the contract price was not inclusive of service tax and that a specific clause in the contract stipulated reimbursement of any 'New Tax' introduced after the award of the contract. They contended that the introduction of GST constituted a 'New Tax' and therefore, the respondents were contractually bound to reimburse the GST paid. They relied on the terms and conditions of the contract. Respondents' arguments: The State submitted that if the petitioner could produce proof of additional tax liability incurred in respect of GST paid during the completion of the contract, the claim would be scrutinized and processed in accordance with the governing policy.