Facts of the Case

The petitioner, M/S Parul Dixit, a proprietorship, had executed works contracts for the Rural Engineering Department (RED) and Public Works Department (PWD), Hardoi, U.P., under agreements entered into prior to the transition from the Value Added Tax regime to the Goods and Services Tax regime. The petitioner claimed to have deposited certain amounts as tax and asserted entitlement to payment of the GST component along with interest on the value of work done under contracts entered into prior to 1 July 2017. While the VAT amount due had been paid to the petitioner, the GST amount was allegedly withheld, which in turn prevented the petitioner from depositing GST with the tax department, exposing the petitioner to a notice (reference No. 09AFUPD4289B1Z7/17-18/61) threatening penalty and interest. The petitioner filed Writ Tax No. 210 of 2023 before the Lucknow Bench of the Allahabad High Court, seeking a mandamus directing payment of the GST component along with interest, and restraining enforcement of the notice. The matter was heard by a Division Bench comprising Justice Vivek Chaudhary and Justice Manish Kumar, and decided on 30 October 2023.

Issues Involved

  1. Whether the petitioner was entitled to payment of the GST component, along with interest, on works contracts entered into prior to 1 July 2017 with the PWD and Rural Engineering Department.
  2. Whether the respondent authorities could be restrained from enforcing the notice threatening penalty/interest for non-payment of GST that the petitioner claimed it could not deposit due to non-receipt of the GST component from the government departments.

Petitioner's Arguments

  • Under the earlier work orders, the petitioner was entitled to payment of the contract amount inclusive of applicable VAT/GST, but while the VAT component was paid, the GST component was never disbursed.
  • Because the GST component was not paid by the respondent departments, the petitioner could not deposit the corresponding GST liability with the tax department.
  • The work in question had been performed for the Executive Engineer, Rural Engineering Department, Hardoi, and the Executive Engineer, Nirman Khand II, PWD, Hardoi, and the petitioner sought a direction for payment of GST along with interest from these departments.
  • The respondents ought to be restrained from enforcing the impugned notice or imposing any penalty, charges or interest upon the petitioner.

Respondent's Arguments

  • The learned Standing Counsel appeared for the State/respondents but the order does not record any specific contest to the petitioner's factual claims regarding non-payment of the GST component.
  • No objection appears to have been raised to the limited procedural relief of permitting the petitioner to file a fresh, documented representation before the concerned executive engineers.

Court Order/Findings

  • The Court did not adjudicate the petitioner's entitlement to the GST component on merits, instead adopting a procedural route for resolution.
  • The petitioner was permitted to move a fresh representation before respondent Nos. 5 and 6 (the concerned Executive Engineers), annexing all supporting documents, within one week; the respondents were directed to decide the representation by a reasoned and speaking order within four weeks of the representation being placed before them.
  • The writ petition was disposed of with these directions, without expressing any view on the petitioner's substantive claim for GST reimbursement.

Important Clarification

Where a government works contractor claims non-payment of the GST component on contracts spanning the VAT-to-GST transition, and has not yet placed a complete, documented representation before the concerned department, the High Court may decline to adjudicate the claim on merits and instead direct the department to decide a fresh representation by a reasoned, speaking order within a fixed time frame.

Sections Involved

  • Transitional provisions governing the shift from Value Added Tax to the Central Goods and Services Tax Act, 2017 and Uttar Pradesh Goods and Services Tax Act, 2017 for pre-existing government works contracts.
  • Departmental guidelines of the Public Works Department and Rural Engineering Department, U.P., governing payment of statutory tax components on works contracts.

Decision – In Favour of

This is a procedural disposal rather than a decision on merits for either side. The petitioner was granted an opportunity to press its claim afresh through a documented representation, with a mandated time-bound reasoned decision, but no ruling was made on the underlying entitlement to the GST component.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Allahabad, Lucknow Bench
  • Case No.: Writ Tax No.210 of 2023
  • CNR: Not available
  • Coram: Justice Vivek Chaudhary and Justice Manish Kumar
  • Decision Date: 30 October 2023
  • Disposal Nature: Writ petition disposed of

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