Tata Steel Utilities And Infrastructure Services LTD Through Jai Pushpit Pallav vs. The State Of Jharkhand Through Its Secretary Deptt Of Urban Development And Housing

Held

The High Court held that the matter needed reconsideration at the level of the concerned respondent, JUIDCO. The Court directed JUIDCO to consider the petitioner's claim in accordance with the law, taking into account all relevant documents, including the provisions of the Sale of Goods Act, 1930, relied upon by the petitioner, and supporting documentation. This reconsideration was to be completed within 12 weeks from the date of receipt of the order or a representation made by the petitioner. The Court did not definitively rule on the entitlement to differential GST rates but remanded the matter for fresh consideration based on the applicable law and the SOP.

Facts

The petitioner, Tata Steel Utilities and Infrastructure Services Ltd., filed two writ petitions challenging the rejection of its claim for differential GST rates on subsisting contracts entered into before July 1, 2017. The contracts were for the "construction of NavJivan (Kust) Ashram Dev Nagar, Jamshedpur" and the "Chakulia Urban Water Supply Scheme," both dated February 28, 2017. The impugned letters rejecting the claim were issued by respondent No. 2, Jharkhand Urban Infrastructure Development Company Ltd. (JUIDCO). The petitioner sought reimbursement of GST at 12%, adjusted for pre-GST tax benefits embedded in the contract value. The rejection occurred before the issuance of a Standard Operating Procedure (SOP) by the Commercial Taxes Department, Government of Jharkhand, on August 26, 2022.

Key Issues

1. Whether the petitioner is entitled to claim differential GST rates on subsisting contracts entered into before the GST regime, considering the contractual clauses and statutory provisions? (Question of law) Petitioner's arguments: The petitioner contended that Clause 45 of the agreement implicitly allowed for tax rate revisions. They further argued that Section 64A of the Sale of Goods Act, 1930, mandates the addition or deduction of increased or decreased taxes in contracts of sale unless a different intention appears. The petitioner asserted that the SOP, particularly Clause 15 which states no revision of contractual value should be considered if there is no clause for revision due to change in tax rate, should not preclude their claim, as the statutory position under Section 64A of the Sale of Goods Act takes precedence. Respondents' arguments: The respondents (State and JUIDCO) submitted that since the claim was initially denied before the SOP was issued, the petitioner was asked to resubmit all relevant documents for consideration in light of the SOP. They did not dispute the applicability of laws like the Sale of Goods Act but argued that the matter should be dealt with by the concerned authorities in accordance with the law.