H.S.J. Enterprise And Anr. vs. State Of West Bengal Represented By Its Secretary TO Finance Department And Ors.

Facts

The petitioners, H. S. J. Enterprise & Anr., filed a writ petition before the High Court of Calcutta seeking directions against the State of West Bengal and its authorities. The core issue revolves around additional tax liability on government contracts. The petitioners contend that contracts awarded either before or after the introduction of GST on July 1, 2017, did not have the applicable GST updated in the Schedule of Rates (SOR) or Bill of Quantities (BOQ) when bids were invited. This has resulted in an unforeseen additional tax burden on ongoing government contracts. They sought a direction to neutralize this impact and update the State SOR to incorporate applicable GST in lieu of the West Bengal VAT.

Held

The High Court disposed of the writ petition by granting the petitioners liberty to file an appropriate representation before the Additional Chief Secretary, Finance Department, Government of West Bengal. This representation should be filed within four weeks from the date of the order. Upon receipt, the Additional Chief Secretary is directed to take a final decision within four months, after consulting with all relevant departments and providing an opportunity of hearing to the petitioners or their authorized representatives. The Court also stipulated that no coercive action shall be taken against the petitioners until a final decision is reached. The Additional Chief Secretary is to act in accordance with law, pass a reasoned and speaking order on merit, and consider all judgments relied upon by the petitioners. The Court did not decide the merits of the claim but provided a procedural path for resolution.

Key Issues

1. Whether the Court should direct the respondents to bear the additional tax liability arising from the execution of government contracts where the Schedule of Rates (SOR) and Bill of Quantities (BOQ) were not updated to include applicable GST, for contracts awarded in both pre-GST and post-GST regimes? Petitioner's Argument: The petitioners argued that the failure to update the SOR and BOQ with GST has led to an unforeseen additional tax burden on government contracts. They sought a directive to neutralize this impact and update the State SOR to reflect applicable GST instead of the erstwhile West Bengal VAT for ongoing contracts awarded before July 1, 2017. Revenue's Argument: The judgment does not record any specific arguments made by the State (revenue) in response to the petitioner's claims. The State was represented by the learned Government Pleader and other counsel.