Facts of the Case

The petitioner, M/s Gordhandas Gobindram A, had been awarded a government works contract before the introduction of the Goods and Services Tax (GST) regime on 01.07.2017. After GST came into force, the petitioner became liable to bear additional tax liability which was not contemplated when the original contract was executed.

The petitioner sought reimbursement of the additional GST burden from the Public Works Department (PWD), relying upon the State Government's policy dated 10.10.2018 which provides reimbursement of additional GST liability arising in respect of contracts awarded before the implementation of GST.

The petitioner also relied upon an earlier judgment of the Chhattisgarh High Court in M/s D.A. Enterprises vs State of Chhattisgarh & Others, wherein similar relief had already been granted.

 Issues Involved

  1. Whether a contractor executing a contract awarded before the introduction of GST is entitled to reimbursement of the additional GST liability?
  2. Whether the State Government's policy dated 10.10.2018 applies to the petitioner's case?
  3. Whether the authorities are required to examine and decide the reimbursement claim upon production of supporting documents?

 Petitioner's Arguments

  • The contract had been awarded before the GST regime came into force.
  • Due to implementation of GST from 01.07.2017, the petitioner incurred additional tax liability which was not part of the original contractual terms.
  • The State Government itself had issued a policy dated 10.10.2018 recognizing reimbursement of such additional GST burden.
  • The petitioner relied upon the judgment in M/s D.A. Enterprises vs State of Chhattisgarh & Others, where identical relief had already been granted by the High Court.
  • Therefore, the respondents were legally bound to reimburse the additional GST liability in accordance with the Government policy.

Respondent's Arguments

The State submitted that:

  • If the petitioner submits a fresh claim together with documentary evidence establishing the actual additional GST liability incurred after implementation of GST, the competent authorities would examine the claim.
  • The claim would be considered strictly in accordance with the State Government's policy dated 10.10.2018.
  • The authorities had no objection to considering the petitioner's claim after verification of supporting documents.

 Court Findings / Order

The High Court observed that:

  • The controversy was already covered by its earlier decision in M/s D.A. Enterprises vs State of Chhattisgarh & Others.
  • Since the State Government had already framed a policy dated 10.10.2018 for reimbursement of additional GST liability in respect of pre-GST contracts, the petitioner's claim deserved consideration under that policy.

Accordingly, the Court disposed of the writ petition with the following directions:

  • The petitioner shall submit a fresh claim before Respondents No. 2 to 5.
  • The petitioner shall furnish all documentary evidence proving the additional GST liability incurred because of implementation of GST.
  • The claim shall be submitted within one week.
  • Upon receipt of the claim along with supporting documents and a copy of the Court's order, the competent authorities shall scrutinize the claim.
  • The respondents shall pass an appropriate decision within 90 days from receipt of the claim while keeping in view the Government Order dated 10.10.2018.
  • No order as to costs.

 Important Clarification

  • Contractors executing government contracts awarded prior to 01.07.2017 may seek reimbursement of additional GST liability if covered by the applicable Government policy.
  • Mere filing of a writ petition does not automatically entitle reimbursement; the contractor must submit proper documentary evidence of the additional GST burden.
  • The competent authority is required to verify the claim and take a reasoned decision in accordance with the State Government's policy.
  • The judgment reinforces that similarly placed contractors are entitled to have their reimbursement claims considered uniformly under the Government's reimbursement policy.

 Sections / Legal Provisions Involved

  • Goods and Services Tax (GST) Act, 2017
  • GST implemented w.e.f. 01.07.2017
  • State Government Policy dated 10.10.2018 regarding reimbursement of additional GST liability
  • Article 226 of the Constitution of India (Writ Jurisdiction)

Link to download the order -

https://mytaxexpert.co.in/uploads/1782968682_114compressed.pdf

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