M/S Anamika Constructions Through Properitor Shri Balendra Singh vs. The State Of Madhya Pradesh

Held

The Court held that the respondents arbitrarily withheld the GST amount of Rs. 17,50,000/-. The Court found that Annexure R-3/1, which the respondents relied upon to cap GST at 5% or 4%, appeared to be a policy to rationalize anomalies arising from the application of GST from 2017, particularly for projects where GST was not initially factored into the cost. However, in the present case, the project's cost element explicitly included GST at 12%, as evidenced by the tender document (clauses 25.1 and 25.2) and the project approval (Annexure P/2). Therefore, it was obligatory for the employer (respondents) to pay GST at the agreed rate of 12% to the contractor (petitioner). The Court quashed the decision of the respondents in withholding the Rs. 17,50,000/- and held that the petitioner is entitled to the release of this balance GST amount. The petition was allowed in these terms.

Facts

The petitioner, M/s Anamika Constructions, sought a writ of mandamus to compel the respondents to release withheld GST payments and interest. The petitioner executed a water supply scheme project for Rs. 6,35,63,000/-. As per clauses 25.1 and 25.2 of the tender agreement, the respondents were liable to pay 12% GST on the contract price, amounting to Rs. 76,27,560/-. While the Directorate of Urban Administration and Development ordered the release of Rs. 57,74,943/-, respondent No. 3 arbitrarily released only Rs. 40,24,943/-, withholding Rs. 17,50,000/- without justification. The respondents argued that a sub-committee of the Mantri Parishad decided on a 5% or 4% GST rate for certain schemes, referencing Annexure R-3/1.

Key Issues

1. Whether the respondents arbitrarily withheld GST payment of Rs. 17,50,000/- from the petitioner, contrary to the contract terms and relevant approvals, thereby violating the petitioner's right to receive the full contractually agreed GST amount? (Question of mixed law and fact, concerning contract interpretation and statutory compliance). Petitioner's arguments: The petitioner contended that clauses 25.1 and 25.2 of the tender agreement explicitly stipulated that GST would be paid separately at the applicable rate, and the project approval (Annexure P/2) clearly included 12% GST in the total approved cost. They argued that the respondents' reliance on Annexure R-3/1, a policy decision regarding GST rates for certain schemes, was misplaced as it did not override the specific contractual terms and project-specific approval for this contract. Respondents' arguments: The respondents argued that they acted in accordance with the directions of the Mantri Parishad sub-committee (Annexure R-3/1), which decided to cap GST payments at 5% or 4% for specific schemes, including the Amrut Peyjal Yojna. They maintained that their action of releasing only Rs. 40,24,943/- was consistent with these policy directives.