Gg Associates vs. State Of Chhattisgarh

Held

The Court disposed of the writ petition by directing the respondent authorities to consider and decide the representation filed by the petitioner on 06.12.2022 at the earliest, preferably within 90 days. While deciding the representation, the respondent authorities were explicitly instructed to take into consideration the order dated 30.09.2022, whereby clause 2.17.1 of the contract was amended. The Court also granted liberty to the petitioner to make a fresh representation along with supporting documents proving the additional tax liability incurred, to facilitate the respondents' decision-making process. Furthermore, the Court stipulated that subject to the representation being decided favorably, the respondents shall take steps for reimbursing the amount forthwith. The Court did not make a definitive finding on the reimbursement claim itself but remanded the matter for consideration by the authorities, guided by the contractual provisions and the departmental order.

Facts

The petitioner, GG Associates, a partnership firm, filed a writ petition before the Chhattisgarh High Court challenging the additional tax liability incurred towards GST. The petitioner was awarded a work order on 25.11.2022, at which time the GST payable was 12 percent. Subsequently, the GST rate was enhanced to 18 percent. The petitioner contended that an amendment to the contract terms on 30.09.2022, specifically clause 2.17.1, stipulated that any new tax or levy imposed after the tender receipt date would be treated as a new tax, and the Engineer in Charge would reimburse the contractor for such new taxes upon proof of payment. The petitioner argued that this principle should apply to the increase in GST rate, requiring reimbursement from the respondents. The petitioner had filed a representation dated 06.12.2022 to the respondent authorities, which was pending decision.

Key Issues

1. Whether the respondents are obligated to reimburse the petitioner for the additional GST liability incurred due to the enhancement of the GST rate from 12 percent to 18 percent, in light of the amended clause 2.17.1 of the contract terms dated 30.09.2022? (Question of law and mixed fact and law, turning on the interpretation of Clause 2.17.1 of the contract and the principle of reimbursement for new taxes). Petitioner's contentions: The petitioner argued that the amendment to clause 2.17.1 on 30.09.2022, which mandates reimbursement for new taxes or levies imposed after the tender date, should also apply to an increase in the existing GST rate. They asserted that the principle of reimbursement for new taxes should logically extend to increased tax liabilities. They relied on the departmental order dated 30.09.2022 itself as the basis for their claim. Revenue/State's contentions: The counsel for the State did not oppose the limited prayer of the petitioner but submitted that the representation would have to be decided strictly in accordance with the provisions of law and the contract governing the field.