Facts of the Case

Sunshine Enterprise and others filed a writ petition before the Calcutta High Court seeking a direction to the West Bengal government authorities to bear the additional tax liability arising on execution of subsisting government contracts — contracts awarded either in the pre-GST regime or the post-GST regime — where the Schedule of Rates (SOR) used to prepare the Bill of Quantities for inviting bids had not been updated to incorporate applicable GST. The petitioners also sought neutralisation of the unforeseen additional tax burden on contracts awarded before the introduction of GST on 1st July 2017, and an update to the State SOR to reflect GST in place of the now-inapplicable West Bengal VAT.

Issues Involved

  1. Whether contractors executing government works under Schedules of Rates that predate the GST transition are entitled to relief for the additional GST burden imposed on ongoing contracts.
  2. Whether the State authorities were obligated to revise the Schedule of Rates to reflect the GST regime.

Petitioner's Arguments

  • The Schedule of Rates used for inviting bids had not been updated to incorporate GST, leaving contractors to absorb an additional tax burden not contemplated when their bids were priced.
  • The State should neutralise this unforeseen burden for contracts spanning the GST transition and update the SOR to reflect GST in place of the erstwhile West Bengal VAT.

Respondent's Arguments

  • The order does not record specific submissions resisting the relief; the State's counsel appears to have left the matter to be addressed through the representation process directed by the Court.

Court Order / Findings

  • The Court disposed of the writ petition by granting the petitioner liberty to file an appropriate representation raising the grievance before the Additional Chief Secretary, Finance Department, Government of West Bengal, within four weeks.
  • The Additional Chief Secretary was directed to take a final decision within four months of receiving the representation, after consulting other relevant departments, and after giving the petitioner an opportunity of hearing.
  • Until the final decision, no coercive action was to be taken against the petitioner, and the order would lapse if the petitioner failed to file the representation within the stipulated time.
  • The decision on the representation was directed to be a reasoned, speaking order considering judgments of different High Courts relied upon by the petitioner.

Important Clarification

This order does not itself grant relief for the GST burden on pre-GST-priced contracts — it only directs a time-bound, reasoned consideration of the contractor's representation by the Finance Department. Contractors facing the same SOR/GST transition issue in West Bengal should note that the remedy directed here is administrative representation, not an automatic entitlement declared by the Court.

Sections Involved

  • Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017 — governing the GST regime effective 1st July 2017 referenced in the dispute.
  • The now-subsumed West Bengal Value Added Tax Act — referenced as the pre-GST regime under which the original Schedule of Rates was framed.

Decision – In Favour of

Disposed of without a decision on merits; the petitioner secured only a time-bound, reasoned consideration of its representation by the Finance Department.

Case Details

Court: High Court at Calcutta
Case No.: WPA 16297 of 2023
Coram: Hon'ble Mr. Justice Md. Nizamuddin
Date of Order: 19.07.2023

Link to Download the Order

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