M/S Sita Homes PVT. LTD., Through Its Managing Director Om Prakash Vijayvargiya vs. State Of M.P.

Held

The Court held that the petitioner is entitled to reimbursement of the differential GST amount of 6% for the period from January 1, 2022, to September 30, 2022. The reasoning was based on the undisputed fact that the GST rate was enhanced to 18% from January 1, 2022, as per Notification No. 15/2021 CT(R). The Court found that respondent No. 2, being a government entity, was liable to pay this enhanced rate for the works executed. The Court rejected the preliminary objection regarding the maintainability of the writ petition, stating that no disputed question of facts was involved, thus making the alternative remedy under the Arbitration Act unnecessary. The ratio decidendi is that government entities are bound to pay the legally applicable enhanced GST rates on works contracts, and if they fail to do so, the contractor is entitled to reimbursement of the differential amount paid by them. The Court directed respondent No. 2 to pay the difference of GST amount to the petitioner at 6% within three months from the receipt of the certified copy of the order. Failing this, the petitioner would be entitled to interest at 6% per annum from the date of entitlement.

Facts

The petitioner, M/s Sita Homes Pvt. Ltd., is a construction company that entered into agreements with respondent No. 2, a government entity, for construction works. The GST rate applicable to the petitioner's services was initially 12% from October 2017 to December 2021. Subsequently, vide Notification No. 15/2021 CT(R) dated 18.11.2021, the GST rate was enhanced to 18% (9% CGST & 9% SGST) effective from January 1, 2022. The petitioner's grievance is that respondent No. 2 continued to pay GST at the old rate of 12% on running bills, forcing the petitioner to pay the enhanced 18% GST. The petitioner sought reimbursement of the extra 6% GST paid from January 1, 2022, to September 30, 2022. Respondent No. 2 acknowledged the liability but stated that approval from the State Government was pending. The petitioner then filed a writ petition before the High Court.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the differential GST amount of 6% for the period from January 1, 2022, to September 30, 2022, from respondent No. 2, a government entity, considering the enhancement of GST rates under Notification No. 15/2021 CT(R)? Petitioner's contention: The petitioner argued that the GST rate was legally enhanced to 18% from January 1, 2022, and respondent No. 2, as a government entity, is liable to pay the increased rate on the works executed. The petitioner has been paying the higher rate and is therefore entitled to reimbursement of the difference of 6% for the specified period. They relied on the fact that respondent No. 2 had accepted this liability in principle. Revenue/State's contention: Respondent No. 2 initially raised objections regarding the maintainability of the writ petition and the availability of an alternative remedy under the Arbitration Act. However, the Court noted that no disputed question of facts was involved. Respondent No. 4, the State GST Department, confirmed that the GST rate had indeed been enhanced to 18% and that respondent No. 2, being a government entity, was liable to pay it.