Facts of the Case

Raa Contractors & Builders Private Limited sought reimbursement of the GST component, amounting to Rs.14,48,633/-, on bills raised for work executed under a contract awarded on 5th September 2017 by the West Bengal State Electricity Distribution Company Limited (WBSEDCL). Though the petitioner annexed all relevant bills and payment documents pertaining to the GST component, the respondent authorities did not disburse the amount, contending the work related to the pre-GST era and that the applicable Schedule of Rates, effective from 1st November 2017, was 'exclusive of GST.'

Issues Involved

  1. Whether a writ petition against a public sector distribution company arising from a contractual dispute over GST reimbursement is maintainable under Article 226.
  2. Whether a Schedule of Rates stating that rates are 'exclusive of GST' relieves the employer of liability to reimburse the GST component to the contractor.

Petitioner's Arguments

  • All bills and supporting documents evidencing payment of the GST component had been placed on record, yet the amount remained undisbursed.
  • As the respondent is a public authority discharging a public duty, the writ petition was maintainable notwithstanding the private contractual character of the underlying agreement, relying on Unitech Limited v. Telangana State Industrial Infrastructure Corporation.

Respondent's Arguments

  • The work was executed in the pre-GST era, and hence there was no liability to reimburse the GST component; alternatively, the Schedule of Rates effective from 1st November 2017 stated that rates were exclusive of GST, indicating GST was not to be borne by the employer.
  • An unreported co-ordinate Bench order was cited in support, and the maintainability of the writ petition was challenged.

Court Order / Findings

  • Since public authorities must maintain a higher standard of fairness and an element of public law was involved even in what was nominally a private contract, the maintainability objection was rejected.
  • The contract was dated 5th September 2017, after the GST cut-off of 1st July 2017 fixed by the West Bengal Finance Department's notification, squarely placing the case in the post-GST era.
  • A Schedule of Rates stating that rates are 'exclusive of GST' merely means the GST component is not built into the quoted rate; it does not fix liability to bear the GST cost on the contractor and does not exonerate the employer, on whom the statutory liability to indemnify a contractor for GST paid on works executed for it ultimately falls under the terms of the enabling government notification.
  • The unreported judgment relied upon by the respondents was found not to lay down any binding proposition, having only directed a policy decision on GST's impact on government contracts generally.
  • The writ petition was allowed, directing the respondent authorities to disburse the petitioner's dues, including the entire GST component paid, by a fixed date.

Important Clarification

  • A government works contract entered into after the GST cut-off date, where the applicable Schedule of Rates is stated to be 'exclusive of GST,' does not thereby shift the burden of GST onto the contractor; the contractor remains entitled to reimbursement of the GST component actually paid, from the public employer, under the enabling government notification governing the transition to the GST regime.

Sections Involved

  • Article 226, Constitution of India - writ jurisdiction, extended here to a public sector undertaking's contractual dispute involving GST reimbursement.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee (contractor), with a direction to disburse the GST component along with other dues.

Case Details

Court: High Court at Calcutta
Case No.: WPA No. 14907 of 2023
Coram: Justice Sabyasachi Bhattacharyya
Date of Order: 05.10.2023

Link to Download the Order

Click here to view/download the full order

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.