Facts of the Case

A batch of six writ petitions (WPC Nos. 5555/2022, 203/2023, 219/2023, 329/2023, 5562/2022 and 5569/2022) was filed by various contractors engaged in construction of roads, bridges and tolls in Chhattisgarh, each having been awarded works contracts before 18.07.2022. The petitioners sought a declaration that Notification No.11/2017-Central Tax (Rate), as amended by Notification No.03/2022-Central Tax (Rate) — which raised the GST rate on works contract services from 12% to 18% effective 18.07.2022 — should not apply retrospectively to contracts executed before that date, and sought refund of the additional 6% GST paid on such pre-existing contracts.

Issues Involved

  1. Whether the increased 18% GST rate could be applied to works contracts executed pursuant to agreements/tenders finalised before the rate increase took effect.
  2. Whether the petitioners were entitled to a refund of the additional 6% GST burden from the respondent State authorities.
  3. Whether the State's inconsistent practice — reimbursing this burden for some departments' contractors but not others — was arbitrary under Article 14.

Petitioner's Arguments

  • The increased GST rate could not be applied retrospectively to concluded contracts without express legislative provision.
  • Contractors had quoted their bids based on the 12% GST rate prevailing at the time; applying the increased 18% rate retrospectively without a refund mechanism was arbitrary, illegal, and violative of Articles 14, 19(1)(g) and 21.
  • Some State departments (PWD, Chhattisgarh Rural Road Development Agency, Urban Administration Department) had already agreed to reimburse the increased GST burden, while the Water Resources Department (and others involved here) had not, creating an unreasonable, discriminatory disparity.
  • This Court's own precedent in M/s D.A. Enterprises v. State of Chhattisgarh (order dated 17.11.2022 in WPT No.94/2020) had already directed reimbursement of such additional GST burden after due scrutiny, and the present petitions were squarely covered by it.

Respondent's Arguments

  • Clause 7.5/7.2 of the relevant contracts stated that rates quoted by the contractor were deemed inclusive of all taxes, including any increase or decrease in the tax rate, making the petitioners' claim without legal basis.
  • The State's circular on reimbursement applied only to differential tax amounts incurred for contracts executed prior to the introduction of GST itself (2017), not to a mere rate increase within the GST regime, and the D.A. Enterprises precedent was distinguishable on facts.

Court Order / Findings

  • The Court followed its earlier ruling in M/s D.A. Enterprises, which had held that rejecting GST reimbursement claims department-wise (while other departments granted them) was arbitrary and violative of Article 14, and that in the absence of a uniform State policy, the impugned rejection deserved to be set aside.
  • Finding the present batch of cases not materially distinguishable from D.A. Enterprises, the Court directed the petitioners to make a fresh claim before the respondent authorities, detailing the difference between the tax liability at the time of bid submission and the excess GST paid after the rate increase.
  • The respondent authorities were directed to process such fresh claims, conduct necessary scrutiny and enquiry, and reimburse the petitioners if found entitled, within four months from the date of the fresh claim.
  • All writ petitions in the batch stood disposed of on this basis, with no order as to costs.

Important Clarification

The Court did not itself declare a blanket right to reimbursement of the 6% GST rate increase — it relied on its own earlier D.A. Enterprises ruling (which did make such findings on the specific facts before it) and directed a fresh, scrutinised claim process for these petitioners, with a four-month decision timeline. Contractors relying on this order should note that actual reimbursement remains conditional on the authorities' scrutiny of the fresh claim, not an automatically enforced right.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Notification No.11/2017-Central Tax (Rate) as amended by Notification No.03/2022-Central Tax (Rate) (GST rate on works contract services)

Decision – In Favour of

Disposed of substantially in favour of the Petitioners, following precedent — a fresh claim process was directed, with authorities required to reimburse if the petitioners are found entitled after scrutiny, within four months.

Case Details

  • Court: High Court of Chhattisgarh, Bilaspur
  • Case No.: WPC No.5555 of 2022 with WPC Nos. 203/2023, 219/2023, 329/2023, 5562/2022 and 5569/2022
  • Coram: Hon'ble Justice Smt. Rajani Dubey
  • Date of Order: Reserved 03.03.2023, delivered 17.04.2023

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