Facts of the Case

The petitioner, Raa Contractors & Builders Private Limited, was awarded a works contract on 5 September 2017 for execution of work connected with the West Bengal State Electricity Distribution Company Limited (WBSEDCL). The dispute concerned non-payment of the GST component of bills raised by the petitioner for work executed under the contract, amounting to approximately Rs. 14,48,633. Although the petitioner annexed bills and supporting documents evidencing payment of the GST component, the respondent State authorities declined to disburse the amount, contending that the work related to the pre-GST era and that the applicable Schedule of Rates, effective from 1 November 2017, was exclusive of GST. The petitioner filed WPA No. 14907 of 2023 before the High Court at Calcutta seeking reimbursement of the GST component. The respondents also challenged the maintainability of the writ petition against what they characterised as a contractual dispute. The matter was heard and decided by Justice Sabyasachi Bhattacharyya on 5 October 2023.

Issues Involved

  1. Whether the writ petition was maintainable against the State authorities in respect of a claim arising from a works contract.
  2. Whether the contract, awarded on 5 September 2017, fell within the pre-GST or post-GST era for the purposes of determining liability to reimburse the GST component.
  3. Whether the Schedule of Rates describing rates as "exclusive of GST" absolved the respondent authorities of liability to reimburse the GST component paid by the petitioner-contractor.

Petitioner's Arguments

  • All bills and documents evidencing payment of the GST component by the petitioner had been duly annexed to the writ petition and the affidavit-in-reply.
  • Despite raising the bills, the respondent authorities had failed to disburse the GST component due, amounting to Rs. 14,48,633.
  • The writ petition was maintainable since the respondents, being public authorities, were bound by a higher standard of fairness, and public interest was involved, relying on Unitech Limited v. Telangana State Industrial Infrastructure Corporation (2021 SCC OnLine SC 99).

Respondent's Arguments

  • The work in question pertained to the pre-GST era, and hence the respondent authorities were not liable to reimburse the GST component to the petitioner.
  • The Schedule of Rates effective from 1 November 2017 expressly stated that rates were exclusive of GST, which was relied upon to argue that the GST component was excluded from the contractual rates altogether.
  • Reliance was placed on an earlier unreported coordinate Bench judgment in WPA 18512 of 2022, and the maintainability of the writ petition was challenged.

Court Order/Findings

  • The objection to maintainability was rejected, since the respondents were public authorities bound to act fairly, and an element of public law was involved despite the underlying private contract.
  • The Court held that since the contract was awarded on 5 September 2017, after the GST cut-off date of 1 July 2017 notified by the West Bengal Finance Department, the case was squarely covered by the post-GST era, and the liability to pay the GST component, though initially on the contractor, was recoverable from the respondent employer.
  • The expression "exclusive of GST" in the Schedule of Rates merely indicated that GST was not built into the quoted rates; it did not fix liability to bear GST on the contractor, and the reliance placed on it by the respondents was held to be misplaced.
  • The writ petition was allowed, directing the respondent authorities to disburse the entire dues of the petitioner, including the GST component, as expeditiously as possible and positively by 17 November 2023, with no order as to costs.

Important Clarification

For government works contracts awarded after the GST cut-off date of 1 July 2017, a Schedule of Rates description stating that rates are "exclusive of GST" does not, by itself, fix the liability to bear the GST component on the contractor; the contractor remains entitled to reimbursement of the GST component from the employer/government department once actually paid.

Sections Involved

  • Notification dated 16 August 2017 issued by the Government of West Bengal, Finance Department, delineating the pre- and post-GST eras with cut-off date 1 July 2017.
  • Provisions of the Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017 governing levy of GST on works contract services.

Decision – In Favour of

The decision favours the Assessee/petitioner-contractor. The Court directed full reimbursement of the GST component on the post-GST works contract, rejecting the State's pre-GST era and Schedule of Rates defences on merits.

Related Case Laws

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

Case Details

  • Court: High Court at Calcutta
  • Case No.: WPA No.14907 of 2023
  • CNR: Not available
  • Coram: Justice Sabyasachi Bhattacharyya
  • Decision Date: 5 October 2023
  • Disposal Nature: Writ petition allowed

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.