Facts of the Case

This is a government contract payment dispute, not a GST law ruling. The petitioner, a contractor, had executed four irrigation works under separate agreements for the Water Resources Department, West Godavari District, and completed them to the satisfaction of the department, with quality-control certificates issued and entries made in the Measurement Books. The final bills, totalling Rs. 27,65,667, were approved but remained unpaid. The 5th respondent's counter affidavit confirmed there was no dispute about the work executed, but stated that the bills — including reimbursement of 5%/12% GST — were pending release of Letter of Credit (LOC) and sufficient budget from the Government.

Issues Involved

  1. Whether the respondents' failure to release the approved final bill amount, including the GST reimbursement component, for admittedly completed works was justified or unjust.

Petitioner's Arguments

  • The works were completed and duly measured, and the final bill of Rs. 27,65,667 was approved by the department, yet payment was withheld despite repeated requests, causing the petitioner severe financial hardship.

Respondent's Arguments

  • The 5th respondent's counter affidavit did not dispute execution of the works, but explained that final bills for the four works were under process in the CFMS Phase-II system and that the GST amount (5%/12%) would be reimbursed once the Government released the Letter of Credit and corresponding funds.

Court Order / Findings

  • Noting the undisputed position that the works had been executed and the bills approved, the Court found the respondents' failure to release payment unjust and untenable, though it was prepared to allow some further time given the LOC/budget constraint.
  • The Court directed the respondents to arrange payment of the amount due to the petitioner, after effecting statutory deductions, within eight weeks from receipt of the order, with no order as to costs.

Important Clarification

The order does not adjudicate any GST law question — it simply enforces payment of an already-approved government works bill of which GST reimbursement (at the standard 5%/12% works-contract rate) was one line item, tied administratively to release of government budget funds.

Sections Involved

  • Article 226 of the Constitution of India — writ of mandamus for release of withheld payment.
  • GST on works contracts under the Central Goods and Services Tax Act, 2017 was referenced only as a bill component (5%/12% reimbursement), without any substantive GST law adjudication.

Decision – In Favour of

Decided in favour of the petitioner-contractor — the writ petition was disposed of with a direction to pay the approved bill amount, including the pending GST reimbursement, within eight weeks.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No. 34356 of 2022
Coram: Hon'ble Justice Ninala Jayasurya
Date of Order: 20 July 2023

Link to Download the Order

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