2021 (9) TMI 299 - HC - GST

Payment/reimbursement of the applicable GST - Works Contract executed prior to GST implementation i.e. 01.07.2017 and work of which were continued post 01.07.2017 - HELD THAT - It is deemed proper to direct the respondent No.3- Principal Secretary, Public Works Department, Government of M.P., Bhopal to decide the said representation which will be filed by the petitioner by a speaking order after providing opportunity of hearing to the representative of the petitioner within a period of three months from the date copy of this order is produced before him. Petition disposed off.

Summary

Issues:
1. Relief sought for payment of GST amount on work executed after GST implementation.
2. Ambiguity regarding GST payment on works contracts executed before GST implementation but continued post-GST.
3. Comparison of tax liabilities under VAT regime and GST regime.
4. Legal provisions and circulars related to GST payment in works contracts.

Analysis:
1. The petitioner, a Partnership Firm engaged in civil construction activities, sought relief for payment of GST amount of ?15,95,269 on work executed after GST implementation. The petitioner had contracts prior to GST enactment and faced additional burden due to GST imposition. The petitioner requested payment from the respondents, which was not considered, leading to the filing of the writ petition.

2. The petitioner highlighted the ambiguity in GST payment on works contracts executed before GST but continued post-GST. The counsel argued that the Central Government and states like Bengal and Orrisa had introduced mechanisms to address such situations, avoiding overburdened taxes on contractors. The petitioner emphasized the need for a policy to deal with GST payment on such contracts.

3. The counsel compared tax liabilities under the VAT regime with the GST regime, pointing out that under VAT, the tax rates were lower, and adjustments were made against liabilities. However, under GST, the rates varied from 5% to 28% on construction material, with no provision for input tax credit for works contracts, imposing an additional burden on the petitioner.

4. Legal provisions and circulars related to GST payment in works contracts were discussed, citing orders by the Union of India and state departments mandating GST payment by departments in works contracts. The counsel referred to a previous judgment directing the consideration of a similar representation, indicating the need for redressal of grievances through comprehensive representations to address the GST payment issues effectively.

In conclusion, the High Court directed the Principal Secretary, Public Works Department, Government of M.P., to decide the petitioner's representation by providing a speaking order after a hearing within three months. The writ petition was disposed of with this direction, aiming to resolve the GST payment dispute effectively.