Facts of the Case

The petitioner, M/s Gordhandas Gobindram A Company, had been awarded a public works contract prior to the implementation of the Goods and Services Tax (GST) regime on 1 July 2017. After GST came into force, the petitioner incurred an additional tax burden while executing the contract.

The petitioner sought reimbursement of this additional GST liability from the State authorities by relying upon the State Government's policy decision dated 10.10.2018, which provided for reimbursement of additional GST liability arising in respect of contracts awarded before the introduction 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, where similar relief had been granted.

 

Issues Involved

  1. Whether a contractor executing a contract awarded before the introduction of GST is entitled to reimbursement of additional GST liability incurred after implementation of GST.
  2. Whether the respondents were required to consider the petitioner's claim in accordance with the State Government's policy dated 10.10.2018.
  3. Whether the petitioner should be directed to submit fresh documentary evidence to establish the additional GST liability.

 

Petitioner's Arguments

  • The petitioner contended that the work contract had been awarded before the GST regime came into force.
  • Due to the implementation of GST from 01.07.2017, the petitioner became liable to pay additional taxes that were not contemplated at the time of execution of the contract.
  • The petitioner relied upon the State Government's policy dated 10.10.2018, which specifically provided for reimbursement of additional GST liability in respect of contracts awarded before GST implementation.
  • It was further argued that the issue was already settled by the Chhattisgarh High Court in M/s D.A. Enterprises vs State of Chhattisgarh & Others, wherein similar relief had been granted under identical facts.

 

Respondents' Arguments

  • The State submitted that the petitioner's claim could be considered subject to submission of a fresh claim along with complete documentary proof demonstrating the actual additional GST liability incurred.
  • The respondents stated that upon submission of the relevant documents, the petitioner's claim would be examined in accordance with the Government Order dated 10.10.2018.

 

Court Order / Findings

The High Court observed that the controversy was substantially covered by its earlier judgment in M/s D.A. Enterprises vs State of Chhattisgarh & Others involving identical facts.

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

  • The petitioner was permitted to submit a fresh claim before the competent authorities.
  • The petitioner was directed to furnish all necessary documentary evidence establishing the additional GST liability incurred due to the introduction of GST within one week.
  • Upon receipt of the claim along with supporting documents and a copy of the Court's order, the concerned authorities were directed to scrutinize the claim.
  • The authorities were directed to take an appropriate decision within 90 days from the date of receipt of the claim while keeping in view the Government policy dated 10.10.2018.
  • No order as to costs was passed.

 

Important Clarification

  • Contractors executing pre-GST contracts cannot automatically receive reimbursement merely because GST was introduced.
  • The contractor must establish the actual additional GST liability by producing proper documentary evidence.
  • The competent authority is obligated to consider such claims in accordance with the State Government's reimbursement policy.
  • The judgment reinforces that similarly situated contractors are entitled to have their claims examined fairly and consistently in light of the Government's policy and earlier judicial precedents.

 

Section Involved

  • Goods and Services Tax provisions relating to transition from the pre-GST regime to GST.
  • Government Policy dated 10.10.2018 governing reimbursement of additional GST liability for contracts awarded before 01.07.2017.

 

Link to download the order -

https://mytaxexpert.co.in/uploads/1782969150_116compressed.pdf

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