Facts of the Case

M/s BMS Projects, a partnership firm based in Jagdalpur, District Bastar, was awarded a contract under the old tax regime for construction and maintenance of rural roads (Bridge LSB and Chhattisgarh State Package No. CG 01-249) by the Chhattisgarh Rural Road Development Agency (CGRRDA) and allied respondents. At the time of award, no service tax was payable. After the GST Act, 2017 came into force, the petitioner became liable to pay service tax on the work — initially 12%, later increased to 18% — which it duly paid. Under the contract's 'New Tax' clause, the Executive Engineer was to reimburse such new tax upon proof of payment. The petitioner's representation for reimbursement remained pending, prompting the writ petition.

Issues Involved

  1. Whether the petitioner, whose contract predated GST, was entitled to reimbursement of the GST/service tax component paid during and after execution.
  2. Whether the respondent authorities were obligated to process the reimbursement claim without further direction from the Court.

Petitioner's Arguments

  • The contract was awarded under the old tax regime with no service tax payable at the time; the price quoted did not include any service tax component.
  • Under the 'New Tax' clause of the contract, the Executive Engineer was contractually bound to reimburse tax introduced after the contract, upon submission of proof.
  • After execution, GST Act 2017 came into force, requiring the petitioner to pay 12% (later 18%) tax, which should be reimbursed as per contract terms.
  • The petitioner is willing to make a further claim with proper documentation if permitted.

Respondent's Arguments

  • The State submitted that if the petitioner produces proof of the additional tax liability suffered, the claim would be scrutinised, processed, and appropriate steps taken as per applicable policy.

Court Order / Findings

  • The Court disposed of the writ petition without deciding the reimbursement entitlement on merits.
  • It directed the petitioner to move a fresh claim before the authorities, supported by cogent documents regarding GST paid during contract execution.
  • The respondent authorities were directed to process and scrutinise the fresh claim and take an appropriate decision within an outer limit of 90 days from receipt.

Important Clarification

This order does not decide whether contractors are entitled to GST reimbursement on pre-GST government works contracts — it only sets a procedural timeline (90 days) for the authorities to decide a properly documented fresh claim. Contractors in similar 'new tax' reimbursement disputes should treat this as a template for seeking a time-bound administrative decision, not as a precedent establishing the reimbursement right itself.

Sections Involved

  • Central Goods and Services Tax Act, 2017 (introduction of GST regime, contract 'new tax' clauses)

Decision – In Favour of

Disposed of with procedural relief only — a direction to decide a fresh claim within 90 days — without any ruling on the petitioner's substantive entitlement to reimbursement.

Case Details

  • Court: High Court of Chhattisgarh, Bilaspur
  • Case No.: WPC No. 3316 of 2023
  • Coram: Hon'ble Shri Justice Parth Prateem Sahu
  • Date of Order: 25.07.2023

Link to Download the Order

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