2021 (2) TMI 142 - HC - GST

Prayer for a direction to the respondents to consider and decide its representation dated 02.01.2021 (Annexure-P/6) within a period of two months - HELD THAT - Considering that the petitioner-Association has already approached the respondents by making a comprehensive representation alongwith certain documents we deem it proper to direct the Chief Secretary Government of Madhya Pradesh Bhopal to decide the representation filed by the petitioner- Association by a speaking order after providing opportunity of hearing to the representative of the petitioner-Association within a period of three months from the date copy of this order is produced before him. Petition disposed off.

Summary

Issues:
1. Representation for consideration of representation dated 02.01.2021
2. Differential amount of GST as against VAT
3. Non-deduction of TDS post-GST implementation
4. Applicability of GST to pending contracts
5. Delegation of power for payment of additional liability arising from GST
6. Standard Operating Procedure for GST payment claims
7. Discrimination in treatment of contractors by State Government

Analysis:
1. The petition was filed by Builders Association of India, seeking direction for the consideration of their representation dated 02.01.2021 within two months. The association, registered under the Societies Registration Act, 1860, comprises builders and contractors engaged in infrastructure development projects for various state departments and local bodies in Madhya Pradesh. They highlighted the transition from VAT to GST regime post-July 2017, leading to a higher tax burden under GST, affecting their business activities and causing some members to halt work due to financial constraints.

2. The petitioner's counsel argued that the differential amount of GST compared to VAT was approximately 8 to 10 percent higher, significantly impacting the trade. They also raised concerns about the non-deduction of TDS from running bills post-GST implementation, despite agreements being executed before July 2017. The absence of clear directives regarding TDS deduction post-GST implementation added to the financial challenges faced by the contractors.

3. The notification implementing GST from July 2017 did not explicitly mention its applicability to pending contracts, creating ambiguity regarding the tax implications for ongoing projects. The petitioner emphasized the need for clarity and consistency in tax deductions and payments to ensure the smooth continuation of their contractual obligations.

4. The court noted that the M.P. Urban Development Corporation Limited and M.P. Road Development Corporation Limited had issued orders delegating powers and laying down Standard Operating Procedures (SOP) for addressing GST payment claims in specific project contracts bid before July 2017. The petitioner argued for equal treatment of contractors across different state departments, emphasizing that discrimination based on the department of work execution was unjustified.

5. Considering the comprehensive representation submitted by the petitioner to various government authorities, the court directed the Chief Secretary of the Madhya Pradesh Government to review the representation and provide a decision within three months, after offering a hearing to the petitioner's representative. This order aimed to address the concerns raised by the Builders Association of India regarding the GST-related financial challenges faced by its members, ensuring a fair and timely resolution to the issues presented in the petition.