Ojas Construction Through Its Partner Rachna Pathak vs. The State Of Madhya Pradesh

Held

The Court held that the petitioner is not entitled to the reimbursement of the additional GST. The Court reasoned that while Clause 25.3 of the agreement addresses situations where GST rates increase, Clause 25.4 explicitly overrides this by stating that any changes in taxes due to legislative changes or for any other reason shall not be payable to the contractor. The increase in the GST rate from 12% to 18% was considered a change in legislation. Therefore, the conditions enumerated in the bi-parte contract could not be altered after the award and during the execution of the work. The Court found no case for the issuance of a writ and directed the petitioner to avail the remedy under the dispute resolution forum. The writ petition was dismissed.

Facts

The petitioner, Ojas Construction, was awarded a contract for dam and canal construction on August 17, 2022, with an applicable GST rate of 12%. Subsequently, the Central Government increased the GST rate to 18% via a notification dated July 18, 2022. The petitioner sought reimbursement of the additional 6% GST borne by them, citing parity with similarly situated contractors. The contract's Clause 25.3 stipulated that if GST rates increased during contract implementation, the additional amount would be paid to the agency. However, Clause 25.4 stated that any changes in taxes due to legislative changes or other reasons would not be payable to the contractor. The petitioner filed representations on April 8, 2025, and September 29, 2025, seeking consideration of their claim.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the additional GST @ 6% borne by them on account of an increase in the GST rate from 12% to 18% during the implementation of the contract, in light of Clause 25.3 and Clause 25.4 of the agreement? Petitioner's Arguments: The petitioner contended that Clause 25.3 of the agreement explicitly provides for the payment of additional GST to the agency in case of an increase in rates during the contract's implementation. They argued that the enhancement of GST from 12% to 18% falls under this provision, entitling them to reimbursement. They also sought parity with other similarly situated contractors who may have received such reimbursement. Revenue/State's Arguments: The respondent State argued that Clause 25.4 of the agreement clearly states that any changes in taxes due to legislative changes or for any other reason shall not be payable to the contractor. They contended that the increase in GST rate is a change in legislation and therefore, the petitioner is not entitled to any additional payment. The State also pointed out that the conditions of the bi-parte contract cannot be changed after its award and during execution.