M/S Ganpati Infrastructures vs. Bilaspur Smart City Limited

Facts

The petitioner, M/s Ganpati Infrastructures, entered into a contract with Bilaspur Smart City Limited (BSCL) on March 26, 2022, for beautification and development work. The contract included a clause regarding the passing of benefits from changes in indirect taxes, including GST. After the contract was signed, the GST rate increased. The petitioner represented to BSCL seeking the benefit of this increased GST rate. BSCL, by an order dated April 11, 2023, rejected the petitioner's claim, stating that no supporting documents were provided with the representation. The petitioner argued that the GST Council's decision is a public document and known to the respondents, and that they are entitled to the increased GST amount as per the contract. The petitioner sought a direction to reconsider their claim, offering to submit supporting documents.

Held

The Court found that the ground for rejection of the petitioner's earlier representation, which was the lack of supporting documents, was not appropriate in the circumstances. The Court noted that the contract contained a clause (Clause C under Taxes, Duties and Statutory Levies) that dealt with changes in indirect taxes due to changes in tax laws, including GST, and stipulated that the benefit of such changes should be passed on. The Court acknowledged the petitioner's submission that the GST Council's decision is a public document and that the petitioner intended to provide relevant documents. Therefore, the Court decided to dispose of the writ petition by permitting the petitioner to submit a fresh representation with all supporting documents. The respondents were directed to consider and decide this fresh representation afresh, without prejudice to their earlier decision, preferably within four months from the date of receipt.

Key Issues

1. Whether the respondents' rejection of the petitioner's claim for the increased GST amount, solely on the ground of lack of supporting documents, is arbitrary and unsustainable, given that the change in GST rate is a public document and the contract provides for passing on such benefits (Section C of Taxes, Duties and Statutory Levies clause)? Petitioner's arguments: The petitioner contended that the GST Council's decision to increase the tax rate is a public document and thus within the knowledge of the respondents. They argued that the contract explicitly allows for the passing of benefits arising from changes in indirect tax laws, including GST. Therefore, the rejection of their claim for want of specific documents, when the change itself is a matter of public record, was arbitrary. They sought a direction to reconsider their claim and offered to submit all necessary supporting documents. Respondents' arguments: The respondents argued that they had considered the petitioner's representation objectively and had rightly rejected it. They did not elaborate further on the specific legal basis for their rejection beyond the initial ground of lacking supporting documents.