M/S Rakesh Pratap Singh Chauhan vs. State Of Uttar Pradesh And 6 Others

Facts

The petitioner, M/s Rakesh Pratap Singh Chauhan, undertook construction work for the Rural Engineering Department of the State. Initially, GST was not applicable to the contract. However, GST became leviable during the contract's currency. A Government Order dated 23.10.2017 mandated the payment of GST to contractors. The petitioner alleges that the respondents paid the GST leviable on the contract, and these amounts were deposited. The petitioner further contends that GST is also payable on the Defect Liability Period of the contract, and the State is liable to pay this GST, but this claim is not being considered. Aggrieved by this, the petitioner approached the High Court.

Held

The Court held that the nature of the grievance raised by the petitioner, specifically concerning the release of GST on the Defect Liability Period of the maintenance contract, could be appropriately examined by respondent no.3. The Court directed respondent no.3 to examine the petitioner's claim regarding the GST payable on the Defect Liability Period. The decision on the release of this amount is to be taken in accordance with the applicable Government Order. The Court did not definitively rule on the State's liability for GST on the Defect Liability Period but remanded the matter for examination. The reasoning was based on the procedural appropriateness of having the claim examined by the designated respondent. The ratio decidendi is that complex financial claims related to government contracts, particularly those involving GST on extended periods, should first be adjudicated by the relevant administrative authority as per applicable government orders. The operative direction was to respondent no.3 to examine the claim and take an appropriate decision within two months, with the release of any payable amount within a further four weeks.

Key Issues

1. Whether the petitioner is entitled to claim GST on the Defect Liability Period of the contract, and if so, whether the State is liable to pay such GST? (Mixed question of law and fact, concerning the interpretation of the contract and the Government Order dated 23.10.2017). Petitioner's Contention: The petitioner argued that GST is payable on the Defect Liability Period, and the State, having paid GST on the main contract, should also be liable for the GST on the Defect Liability Period. The petitioner relied on the Government Order dated 23.10.2017, which provided for the payment of GST to contractors. Respondent's Contention: The State Counsel submitted that the nature of the claim raised by the petitioner could be more appropriately examined by respondent no.3 (an unspecified authority). No specific arguments were recorded regarding the entitlement to GST on the Defect Liability Period or the State's liability.