M/S. Raghava-Hes-Navayuga (Jv) vs. The Pay And Accounts Officer

Held

The Court disposed of the writ petition with the consent of the learned counsel for the parties. The Court directed the petitioners to submit their bills with 18% GST pertaining to works executed from September 22, 2025, onwards, to the Office of the Executive Engineer, Irrigation Division No. XI, Marrigudem, Nalgonda District, as requested by the concerned officer. The Court further directed that the Executive Engineer shall process these bills within a period of one week from the date of receipt of the bills. The Pay and Accounts Officer, Works and Projects, Nalgonda District, was directed to pass the bills submitted by the petitioner, in accordance with the specific instructions issued vide the letter dated September 26, 2026, within a period of two weeks thereafter. The Court noted that the respondents had initiated steps to address the grievance of the petitioners. No orders were made as to costs. The issue of the refund of the differential GST amount and the legality of the initial rejection of the bill were implicitly resolved by directing the submission of bills at 18% GST and their subsequent processing and payment.

Facts

The petitioner, M/s. Raghava-HES-Navayuga (JV), a joint venture, filed a writ petition challenging a letter dated July 29, 2026, issued by the Pay and Accounts Officer (Respondent No. 1) to the Executive Engineer (Respondent No. 2). This letter rejected the petitioner's submitted bill (Token No. 2701659008 dated July 27, 2026) and directed the submission of a fresh bill with GST at 12% instead of 18% for a composite supply of works contract involving predominantly earthwork. The contract, dated January 5, 2017, was for a value of Rs. 1283,74,28,898/-. The petitioner sought the release of Rs. 4,01,62,135/-, representing the difference in GST rates from 18% to 12%, including Rs. 1,48,53,139/- already recovered from a previous bill paid at the higher rate. The petitioner also sought directions for future bills to be processed with GST at 18% or as amended.

Key Issues

1. Whether the letter dated July 29, 2026, issued by Respondent No. 1, directing the petitioner to submit a fresh bill with GST at 12% instead of 18% for the composite supply of works contract, is illegal, arbitrary, and without jurisdiction, contrary to relevant Government Orders and Notifications? 2. Whether the petitioner is entitled to the release of Rs. 4,01,62,135/-, representing the difference in GST rates from 18% to 12%, including the amount recovered from a previous bill? 3. Whether future running account bills raised by the petitioner under the contract should be processed with reimbursement of GST at 18% or as subsequently amended? Petitioner's arguments: The petitioner contended that the rejection of their bill and the demand for a lower GST rate were illegal, arbitrary, and without jurisdiction. They relied on GO Ms No. 67 dated July 4, 2018, Notification No. 15/2025-State Tax (Rate) dated September 18, 2025, and Notification No. 15/2025-Central Tax (Rate) dated September 17, 2025. They sought the release of the differential GST amount and processing of future bills at 18% GST. Respondents' arguments: The respondents, through the learned Assistant Government Pleader for Irrigation, relied on a letter dated September 26, 2026, indicating that the petitioner agency was requested to submit bills with 18% GST rates for works executed from September 22, 2025, onwards. Another letter dated September 11, 2026, stated that the contractor is entitled to GST at 18% after a comprehensive order is issued with effect from September 22, 2025, and that bills with 18% GST would be admitted for payment as and when received, in terms of Article 3 of the Telangana Financial Code, Volume I. They contended that steps had been initiated to address the grievance.