2019 (9) TMI 268 - HC - GST

Levy of GST - Works contract - situation prior to GST regime - applicability of G.O.Ms.No.296, Finance Salaries Department, dated 09.10.2017- HELD THAT - There is no disputation that paragraph 10(a) is applicable up to 30.06.2017 and paragraph 12 is applicable post 30.06.2017 i.e., on and from 01.07.2017. Parties hereto will now stand governed by paragraph 10(a) and paragraph 12 of aforesaid G.O.Ms.No.296, Finance Salaries Department, dated 09.10.2017 - The exercise of quantification qua para 10(a) shall be completed by both the parties as expeditiously as possible and in any event within 12 weeks from the date of receipt of a copy of this order - petition disposed off.

Summary

Issues:
1. Interpretation of GST liability under a contract dated before the GST regime.
2. Application of Government Order on GST rates for works contracts.
3. Resolution of tax liability under GST for ongoing work.

Analysis:
1. The judgment dealt with the issue of interpreting the Goods and Service Tax (GST) liability under a contract dated before the GST regime came into effect. The court noted that the contract in question was dated before the GST regime, and thus, did not provide for the payment of GST. However, with the GST regime becoming operational, the petitioner raised concerns regarding the liability to pay GST. The court observed that the prescribed rate of GST for the contract in question was 12%, as per the relevant entry under Chapter 24. The petitioner sought direction to pay the difference of 10% GST on the original contract value to align with the current tax laws.

2. The judgment also addressed the application of a Government Order (G.O.Ms.No.296) issued by the Government of Tamil Nadu concerning GST rates on works contracts. The court provided a historical background of the Government Order, highlighting changes in GST rates and the legal challenges faced. The court clarified that paragraph 10(a) of the Government Order applied until 30.06.2017, while paragraph 12 became applicable from 01.07.2017 onwards. The court directed the parties to adhere to the provisions of paragraphs 10(a) and 12 of the Government Order for quantification and payment of GST in accordance with the revised agreement value.

3. Lastly, the judgment focused on resolving the tax liability under GST for the ongoing work pursuant to the contract. The court instructed both parties to complete the quantification process as per paragraph 10(a) of the Government Order within 12 weeks. It emphasized that the work under the contract should continue without impediment during this process. The court disposed of the writ petition based on the directions provided in the earlier order, without the need for further orders. The judgment concluded by stating that there would be no costs awarded, and the connected miscellaneous petition was closed.