2020 (2) TMI 673 - HC - GST

Increase in tax rate from 2% before GST regime to 12% post GST - works contract - Scope of contract between the parties - Restraint on respondent to deduct any amount more than 2% in the name of tax from the bill of the writ petitioner - HELD THAT - There cannot be any manner of doubt whatsoever that the writ petitioner would be subject to tax as per the GST Act, which was enacted on 12th April, 2017. The petitioner has also received payment for work done. The prayer in the writ petition, therefore, cannot be considered by this Court. Petition dismissed.

Summary

Issues:
- Petitioner seeking to restrain respondent from deducting more than 2% tax from bill.
- Change from VAT and Service Tax to GST affecting petitioner's liability.
- Counter affidavit filed by North Central Railway Administration.

Analysis:
The petitioner, a Railway Civil Contractor, approached the Court to prevent the North Central Railway Administration from deducting more than 2% tax from the bill. The petitioner participated in a bid for annual repairs and maintenance, quoting a rate anticipating taxation at 2%. However, the introduction of GST on July 1, 2017, increased the tax liability to 12%, which was unforeseen during the bidding process. The respondent, North Central Railway Administration, argued in a counter affidavit that the GST Act was enacted on April 12, 2017, and the Letter of Acceptance issued on July 28, 2017, clearly stated that suppliers would be subject to GST as per the applicable rules. The Contract Agreement was executed on November 13, 2017, confirming the liability under the GST regime. The Court found that the petitioner had already received payment for the work done and, considering the enactment of the GST Act, dismissed the petition, stating that the petitioner's prayer could not be entertained as the tax liability was governed by the GST Act in force at the time of the contract.