M/S Classic vs. State Of West Bengal And Ors.

Facts

The petitioners, M/s. Classic & 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 the additional tax liability arising from government contracts, whether awarded before or after the introduction of GST on July 1, 2017. The petitioners contend that the Schedule of Rates (SOR) and Bill of Quantities (BOQ) for these contracts were not updated to incorporate applicable GST, leading to an unforeseen tax burden. They sought directions to neutralize this impact for ongoing contracts awarded pre-GST and to update the State SOR to include GST in lieu of West Bengal VAT for future contracts.

Held

The High Court disposed of the writ petition by directing the petitioners to file appropriate representations before the Additional Chief Secretary, Finance Department, Government of West Bengal, within four weeks. Upon receipt, the Additional Chief Secretary is mandated to take a final decision within four months after consulting relevant departments and providing the petitioners an opportunity of hearing. The court emphasized that the Additional Chief Secretary must act in accordance with law, pass a reasoned and speaking order, and consider all judgments of different High Courts relied upon by the petitioners. Until a final decision is made, no coercive action is to be taken against the petitioners. The court also noted that if representations are not filed within the stipulated time, the order would cease to have force. The specific question of who bears the additional tax liability was not directly decided but was to be addressed in the representation process.

Key Issues

1. Whether the State authorities are liable to bear the additional tax burden arising from the execution of government contracts due to the non-incorporation of applicable GST in the Schedule of Rates (SOR) and Bill of Quantities (BOQ) for contracts awarded in the pre-GST regime or post-GST regime without updating the SOR. Petitioner's Contention: The petitioners argued that the introduction of GST resulted in an unforeseen additional tax burden on government contracts. They sought relief by way of directions to the respondents to bear this additional liability and to update the State SOR to reflect applicable GST instead of the erstwhile West Bengal VAT. They relied on the principle that unforeseen tax burdens should be addressed by the contracting authority. Revenue/State's Contention: The judgment does not record any specific arguments or contentions made by the State respondents. The court's disposal was based on directing the petitioners to make representations.