Shamsul Islam Barlaskar vs. The State Of Assam And 5 Ors

Held

The Court acknowledged that the petitioner's representation regarding the tax liability difference between VAT and GST had not been attended to. Citing a previous order in a similar writ petition filed by the same petitioner (WP(C) No. 555/2021), the Court noted that the Taxation Department had not yet decided on the applicable tax regime for work periods after the advent of GST. In that prior case, the Court had directed the Commissioner of Tax, Assam, to decide within one month whether the Assam Value Added Tax Act, 2005, or the Assam Goods and Services Tax Act, 2017, would be applicable. Applying the same reasoning, the present Court directed the Commissioner of Taxes to take a final decision on the issue raised in this writ petition within one month from the date of the order. The decision, once taken, was to be duly notified, and the petitioner would be bound by it, subject to their satisfaction. No coercive action was to be taken against the petitioner for non-payment of tax until such a decision was reached. The writ petition was disposed of at the motion stage with these observations.

Facts

The petitioner, Shamsul Islam Barlaskar, was awarded a construction work contract in 2015. At the time of the contract, Value Added Tax (VAT) was applicable at 5%. With the introduction of Goods and Services Tax (GST), VAT was subsumed, and the applicable rate increased to 12%. The petitioner's contention is that the employer (respondent No. 4, Director of Fisheries) should bear the difference in tax arising from the change in tax regime. However, the running bills prepared by the department did not include the GST tax amount. The petitioner submitted a representation on January 6, 2021, which remained unattended. A similar matter concerning the petitioner was decided by the Gauhati High Court in WP(C) No. 555/2021 on February 17, 2021.

Key Issues

1. Whether the employer is liable to bear the increased tax component arising from the change in tax regime from VAT to GST for the construction work awarded prior to the GST regime, as per Section 17 of the CGST Act, 2017 and Section 12 of the Assam Value Added Tax Act, 2005, or any other relevant provisions. Petitioner's Arguments: The petitioner argued that the increased tax liability due to the GST regime should be borne by the employer, as the contract was awarded when VAT was applicable. The change in statutory tax arrangement should not result in an increased burden on the contractor. The petitioner relied on the principle that contractual terms should be interpreted to reflect the tax regime in place at the time of agreement, and subsequent statutory changes impacting costs should be absorbed by the party benefiting from the work. Revenue/State's Arguments: The respondent did not explicitly argue on the merits of who should bear the tax difference. However, their representative in a similar case stated that the issue was yet to be decided by the authorities in the Taxation Department, and it was uncertain under which tax regime the petitioner would be covered for the period subsequent to the advent of GST. The respondent's stance indicated a lack of a clear departmental decision on the matter.