Facts of the Case

M/s.SPK and Co., a contractor executing National Highways works at Madurai, sought reimbursement of the differential GST arising when the applicable rate rose from 12% to 18% with effect from 18.07.2022. Though the work was completed on 08.06.2022, invoices were raised only after the rate change, and the third respondent, the Divisional Engineer, National Highways, rejected the reimbursement claim by order dated 26.04.2024 under Section 14(a)(i) of the CGST Act, 2017, relying on a Circular dated 10.02.2023 that placed the burden of increased tax on the highway authority in appropriate cases.

Issues Involved

  1. Whether the increased GST rate could be fastened on the National Highways Authority when the delay in invoicing after work completion was attributable to the contractor.
  2. Whether disputed questions regarding the date of invoicing and payment could be adjudicated in writ jurisdiction.

Petitioner's Arguments

  • Under Section 14(a)(i) of the CGST Act, the applicable GST rate is the one prevailing on the date of invoice or receipt of payment, whichever is earlier, and since both fell after the rate hike, the differential tax burden should shift to the highway authority.
  • Per the Circular dated 10.02.2023 of the Ministry of Road Transport and Highways, any increase in tax rate after invoicing and payment should be borne by the National Highways Authority, not the contractor.

Respondent's Arguments

  • The work was not completed within the extended contractual timeline of 20.05.2022, and the invoices and payments were made only after the rate revision solely due to the contractor's own delay, not any default of the respondent.
  • Where default in raising the invoice lies with the contractor, the higher GST rate cannot be fastened on the National Highways Authority.

Court Order / Findings

  • The Court found that though the work completion certificate was issued on 08.06.2022, no invoice was raised for over 40 days thereafter, until after the rate hike on 18.07.2022.
  • The Court held the delay in invoicing was attributable to the petitioner-contractor, not the third respondent, and hence the differential tax claim was rightly denied, while noting the Circular would have applied had the respondent caused the delay.
  • Observing that the underlying facts were disputed and unsuited to writ adjudication, the Court dismissed the petition with liberty to pursue remedy before a civil court or arbitral forum, uninfluenced by its observations.

Important Clarification

  • Under Section 14(a)(i) of the CGST Act, the rate applicable at the earlier of invoice date or payment date governs the transaction — but the party responsible for the delay in invoicing bears the consequence of any resultant rate increase.
  • Disputed factual questions about invoicing delay and contractual compliance are better suited to civil or arbitral adjudication than to writ jurisdiction under Article 226.

Sections Involved

  • Section 14(a)(i), CGST Act, 2017 – determines the time of supply, and hence the applicable GST rate, upon a change in rate of tax.

Decision – In Favour of

Decided in favour of the Department/respondent. The reimbursement claim was dismissed, with liberty to the contractor to pursue the dispute before a civil court or arbitral forum.

Case Details

Court: Madurai Bench of Madras High Court
Case No.: W.P.(MD) No.35386 of 2025 and W.M.P.(MD) Nos.28075 & 28077 of 2025
Coram: Hon'ble Mr. Justice Krishnan Ramasamy
Date of Order: 10.12.2025

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