M/S Ganpati Infrastructures vs. Bilaspur Smart City Limited

Facts

The Petitioner, M/s Ganpati Infrastructures, entered into a contract with Respondent No. 1, Bilaspur Smart City Limited, on July 6, 2022, for rooftop solar power plants. Following the contract, the GST Council increased the tax rate from the existing rate to 18%. The Petitioner claimed entitlement to the difference in GST amount based on Clause C of the contract, which allows for passing on the benefit of changes in indirect tax laws. The Petitioner made several representations to the respondents. On April 11, 2023, the respondents rejected the Petitioner's claim, citing a lack of supporting documents for the claimed tax changes. The Petitioner argued that the GST Council's decision is a public document and the rejection was arbitrary. The Petitioner sought a direction to reconsider the claim, offering to provide supporting documents.

Held

The Court held that the rejection of the Petitioner's claim by the respondents on April 11, 2023, was based on the ground that the representation was not supported by documents. Considering the contractual clause (Clause C) which allows for passing on the benefit of changes in indirect taxes due to changes in indirect tax laws, including GST law, and the Petitioner's offer to submit a fresh representation with all supporting documents, the Court found it appropriate to permit the Petitioner to submit a fresh representation. The respondents are directed to consider and decide this fresh representation without prejudice to their earlier decision, preferably within four months from the date of receipt. The Court did not decide on the merits of the claim itself but allowed the Petitioner an opportunity to present their case with proper documentation.

Key Issues

1. Whether the rejection of the Petitioner's claim for the differential GST amount by the respondents was arbitrary and unsustainable, given that the claim was based on a decision of the GST Council, a public document. Petitioner's Argument: The Petitioner contended that the GST Council's decision to increase the tax rate is a public document and within the knowledge of the respondents. They argued that Clause C of the contract mandates the passing of benefits arising from changes in indirect tax laws, including GST. The Petitioner asserted that the rejection of their claim for want of documents was arbitrary and unsustainable, and they offered to submit all relevant supporting documents in a fresh representation. Respondents' Argument: The respondents argued that they had objectively considered the Petitioner's representations and rightly rejected them. They maintained that the rejection was based on the Petitioner's failure to provide adequate supporting documents to substantiate their claim for the differential GST amount.