M/S Ganpati Infrastructures vs. Bilaspur Smart City Limited

Facts

The petitioner, M/s Ganpati Infrastructures, a construction service provider, entered into a contract with Bilaspur Smart City Limited (BSCL) on March 31, 2022, for road and drain construction. The contract included a clause (Clause C) stipulating that benefits arising from changes in indirect tax laws, including GST, would be passed over to the other party upon submission of formal requests with supporting documents. Following a GST Council decision that increased the GST rate, the petitioner sought the differential GST amount. BSCL rejected the petitioner's representation on April 11, 2023, citing a lack of supporting documents. The petitioner argued that the GST Council's decision is a public document and that BSCL should have incorporated the change.

Held

The Court found the rejection of the petitioner's claim on the ground of lacking supporting documents to be arbitrary and unsustainable, especially considering that the claim was based on a GST Council decision, which is a public document and within the knowledge of the respondents. The Court noted that Clause C of the agreement clearly outlines the procedure for passing on the benefits of changes in indirect tax laws, requiring the petitioner to submit a formal request with supporting documents, and BSCL to verify and approve these documents. Given the circumstances, the Court deemed it appropriate to permit the petitioner to submit a fresh representation with all supporting documents. The respondents are directed to consider and decide this fresh representation afresh, without prejudice to their earlier decision, at the earliest, preferably within four months from the date of receipt. The Court did not decide on the merits of the claim itself but allowed for a proper re-consideration.

Key Issues

1. Whether the rejection of the petitioner's claim for differential GST amount by the respondents was arbitrary and unsustainable, given that the claim was based on a GST Council decision, which is a public document, and the contract contained a clause for passing on benefits of indirect tax law changes? Petitioner's Contention: The petitioner argued that the GST Council's decision is a public document and that Clause C of the contract mandates BSCL to incorporate changes in indirect tax laws, including GST. They contended that the rejection of their claim solely for want of documents was arbitrary, as the respondents were aware of the GST Council's decision. The petitioner also stated their willingness to submit all relevant documents in a fresh representation. Respondents' Contention: The respondents argued that they had objectively considered the petitioner's representation and rightly rejected it. They maintained that the rejection was based on the lack of supporting documents to substantiate the claim.