Facts of the Case

M/s Ganpati Infrastructures had entered into a contract with Bilaspur Smart City Limited (BSCL) for construction of a road and drain for waste-water treatment in Koni area, with a Letter of Acceptance dated 31.03.2022. After entering the contract, the GST Council enhanced the applicable GST rate to 18%, and the petitioner claimed entitlement to the differential GST amount under Clause C of the contract's 'Taxes, Duties and Statutory Levies' provision, which required the parties to pass on the benefit of any change in indirect tax law (including GST law) over and above the total contract value, subject to the contractor submitting a formal request with supporting documents. BSCL rejected the petitioner's representation on 11.04.2023 for lack of supporting documents.

Issues Involved

  1. Whether BSCL's rejection of the petitioner's claim for the GST rate-differential, purely for want of supporting documents, was sustainable given that the change in GST rate was a public decision of the GST Council.

Petitioner's Arguments

  • Rejecting the claim merely for lack of 'supporting documents' was arbitrary, since the GST Council's rate-change decision was a public document already within the respondents' knowledge; the claim was based on Clause C of the agreement and the petitioner offered to submit a fresh representation with relevant documents.

Respondent's Arguments

  • The representations submitted by the petitioner had been considered in an objective manner and rightly rejected.

Court Order / Findings

  • The Court examined Clause C of the agreement, which required a formal request with necessary supporting documents to BSCL before it would incorporate any change-in-tax-law benefit into invoices.
  • It found it appropriate to dispose of the writ petition by permitting the petitioner to submit a fresh representation, this time enclosing all supporting documents for its GST rate-differential claim.
  • BSCL was directed to consider and decide the fresh representation afresh, without prejudice to its earlier 11.04.2023 decision, within four months.

Important Clarification

This case shows how a 'change in law' clause tied to GST rate changes operates in government infrastructure contracts: courts will not simply direct payment because the GST Council changed the rate — the contractor must still comply with the contract's documentation requirements, and the assessing authority (here, BSCL) gets a fresh opportunity to examine a properly supported claim before any payment obligation is judicially enforced.

Sections Involved

  • Clause C, 'Taxes, Duties and Statutory Levies', of the works contract between the parties — a contractual (not statutory) change-in-GST-law pass-through provision.
  • GST Council decisions on rate changes under Article 279A, Constitution of India, 1950 (as amended by the Constitution (101st Amendment) Act, 2016) — the underlying trigger for the claim, referenced but not independently adjudicated.

Decision – In Favour of

Neither party finally succeeded; the writ petition was disposed of by remanding the GST-differential claim to BSCL for fresh consideration upon the petitioner submitting supporting documents, without the Court ruling on entitlement.

Case Details

  • Court: High Court of Chhattisgarh, Bilaspur
  • Case No.: WPC No. 4150 of 2023
  • Coram: Hon'ble Shri Parth Prateem Sahu, Judge
  • Date of Order: 20 September 2023

Link to Download the Order

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