M/S Sri Sai Infrastructure Having Its Office At A-310, 3Rd Floor vs. Union Of INDIA

Held

The Court held that the petitioners should be directed to make a fresh claim before the respondent authorities, detailing the difference in tax liability incurred at the time of bid submission and the excess tax paid due to the introduction of GST. Upon receipt of such a claim, the respondent authorities are directed to forthwith process it. After due scrutiny and inquiry, if the petitioners are found entitled to reimbursement of the additional tax liability, they shall be suitably reimbursed. The Court noted that some departments of the State Government had accepted similar claims from contractors, and that the State Government itself had taken a decision to reimburse additional tax burdens in certain cases. The Court found the present cases indistinguishable from the case decided in WPT No. 94/2020. The entire exercise of processing the claims and reimbursement is to be completed within a period of 4 months from the date the petitioners make their fresh claim. The Court did not expressly leave any issue undecided.

Facts

A batch of writ petitions were filed by various construction companies (M/s Surana And Company, M/s N.C. Nahar, M/s Sri Sai Infrastructure, M/s Shreeji Infrastructure India Private Limited, M/s Alok Buildtech Pvt. Ltd., and M/s K. Chandrasekhar Rao) against the Union of India and the State of Chhattisgarh and its departments. The petitioners were awarded works contracts at different times. Their primary grievance was the inaction of the respondent State authorities in not refunding or reimbursing an additional 6% GST liability imposed on them effective from July 18, 2022, for works contracts executed prior to this date. The petitioners contended that their contracts were signed, and tenders accepted, with a 12% GST liability at the time.

Key Issues

1. Whether Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 03/2022-Central Tax (Rate), prescribing an 18% GST rate for works contract services, is inapplicable to contracts executed prior to July 18, 2022? (Question of law) 2. Are the petitioners entitled to a refund of the additional 6% GST paid on contracts executed prior to July 18, 2022? (Question of mixed law and fact) Petitioner's arguments: The actions and inactions of the respondents are unreasonable, illegal, arbitrary, and violative of Articles 14, 19(1)(g), and 21 of the Constitution. The State must act justly and fairly. The petitioners relied on a previous order of the High Court in WPT No. 94/2020, which directed reimbursement of additional tax burdens in similar circumstances. They also pointed to the fact that some government departments had already accepted such claims. Respondent's arguments: The State argued that the petitioners' contract terms, specifically Clause 7.2, restricted the benefit of any increase or decrease in tax rates. Until the agreement is changed by both parties, the petitioners are not entitled to relief as they are bound by the contract. The State also argued that a previous order from the Court in WPT No. 94/2020 was not applicable due to different facts and conditions. Reliance was placed on the Supreme Court judgment in United India Insurance Co. Ltd. vs Harchand Rai Chandan Lal.