2022 (4) TMI 1524 - HC - GST

Rate of GST for works contract services executed prior to 18.07.2022 - applicability of N/N. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended by notification No. 03/2022-Central Tax (Rate) dated 13.07.2022 - Seeking refund of 6% of additional GST paid by them for the contract executed prior to 18.07.2022 - HELD THAT - The documents submitted by the petitioners in the present writ petitions postulate that some of the departments of the State Government of Chhattisgarh have accepted such claim of the contractors where certain additional burden of money was incurred upon them after coming into force of the GST. This Court in M/S D.A. ENTERPRISES THROUGH ITS PROPRIETOR DINESH KUMAR MISHRA VERSUS STATE OF CHHATTISGARH THROUGH THE SECRETARY; CHIEF ENGINEER HASDEO BASIN; SUPERINTENDING ENGINEER; EXECUTIVE ENGINEER MANIYARI 2022 (12) TMI 1136 - CHHATTISGARH HIGH COURT directed the petitioner therein to make a fresh claim showing the difference of tax liability that was incurred at the time of submission of bids and the excess tax paid by him in the light of the introduction of the GST and upon such claim being made, the respondents were directed to forthwith process the same and after due scrutiny and enquiry, the petitioner therein be suitably reimbursed the additional tax burden incurred by him. Thus, keeping in view the fact that present cases are not distinguishable to that of above case, it would be just and expedient in the interest of justice to direct the petitioners herein as well to follow the process, as has been directed/observed in the aforesaid writ petition. Accordingly, it is directed that the petitioners shall make a fresh claim before the respondent authorities agitating their grievance and upon such claim being made, the respondent authorities shall proceed ahead with the necessary scrutiny and enquiry and thereafter if the petitioners are found entitled to be reimbursed the additional tax liability incurred upon them, they will suitably be reimbursed. Petition disposed off.

Summary

Issues involved:
The judgment involves a declaration sought by petitioners regarding the inapplicability of a GST rate notification for works contract services executed before a certain date and the entitlement to a refund of additional GST paid. The main issue revolves around the retrospective application of the amended GST rate and the refusal of the respondent state authorities to grant refunds to the petitioners.

Details of the Judgment:

Issue 1: Declaration of inapplicability of GST rate notification
The petitioners, involved in construction projects, challenged the applicability of a GST rate notification for works contract services executed before a specific date. They argued that retrospective application of the amended GST rate is unreasonable, illegal, and violates fundamental rights under the Constitution of India. The petitioners claimed that they bid based on the 12% GST rate at the time, and applying the increased rate retrospectively is impermissible in law. Reference was made to a previous court order and a Supreme Court judgment to support their case.

Issue 2: Refund of additional GST paid
The petitioners contended that the respondent state authorities failed to grant a refund of the 6% additional GST liability imposed on works contracts executed before a certain date. They highlighted the inconsistency in the treatment of contractors by different government departments regarding reimbursement of additional tax burdens. The court referred to a previous case where the government had decided to reimburse such additional tax burdens and directed the petitioners to make a fresh claim for refund, ensuring due scrutiny and reimbursement within a specified timeline.

Conclusion:
The High Court, after considering the arguments from both parties and the precedent set in a previous case, directed the petitioners to make a fresh claim for refund of the additional tax liability. The court emphasized the need for a fair and uniform approach in dealing with such claims and ordered the respondent authorities to process the claims promptly, ensuring reimbursement if found entitled. The judgment aims to address the grievances of the petitioners regarding the retrospective application of the GST rate and the lack of refund mechanisms, providing a pathway for resolution within a specified timeframe.