2018 (12) TMI 1999 - HC - GST

Liability of GST which has been imposed upon the petitioner after inception of GST Act, 2017 - Inability to file the GST return because before GST regime the petitioner was liable to pay 2% of the Commercial Tax on Works Contract (Civil) which is now increased to 18% or 12% which is to be compensated by the department - HELD THAT - Careful reading of the grievance raised by the petitioner reveals that the same emanates from the agreement entered into between the petitioner and the Public Works Department. It is not disputed by learned counsel for the petitioner that there exists dispute resolution mechanism in the agreements. In view whereof instead of dwelling on the matter as to whether the department should or should not enter into supplementary agreement or to make existing works contract as GST neutral, the petitioner is relegated to seek redressal as per mechanism provided in the agreement. In case if such a dispute is raised, it is expected of the authorities concerned to address the issue objectively and expeditiously, preferably within three months from the date of communication of the order. Petition disposed off.

Summary

Issues Involved:
1. Liability of GST imposed on the petitioner after the inception of GST Act, 2017.
2. Consideration of payment of 18% or 12% GST on the value of work done for contracts executed before 01.07.2017.
3. Non-filing of GSTR 3B return under Central Goods and Services Act, 2017.
4. Dispute resolution mechanism in agreements with the Public Works Department.

Analysis:

1. Liability of GST:
The petitioner, a Class Contractor with various works contracts under agreements with the Public Works Department, sought direction regarding the liability of GST imposed after the GST Act, 2017. The petitioner argued that due to inaction of the department, they were subjected to notices for non-filing of GSTR 3B return. The petitioner contended that agreements were executed before the GST regime, and the increased GST rate should be compensated by the department. The petitioner highlighted the lack of remedial measures taken by the department despite provisions like Clause 19.17 in the agreements.

2. Payment of GST on Pre-GST Contracts:
The petitioner requested the respondents to consider and pass orders on paying 18% or 12% GST on the value of work done for contracts executed before 01.07.2017. The petitioner emphasized that they were unable to file GST returns due to the transition from paying 2% Commercial Tax to higher GST rates, which they believed should be compensated by the department. The petitioner also raised concerns about not being able to adjust Input Tax Credit (ITC) with the liability as they were not receiving GST from the department.

3. Non-filing of GSTR 3B Return:
Notices were issued to the petitioner for non-filing of GSTR 3B return under the Central Goods and Services Act, 2017. The petitioner attributed this issue to the inaction or indecision of the Public Works Department. The petitioner highlighted the impact of the change in tax regime on their ability to comply with the new GST requirements and the challenges faced in adjusting ITC with the liability due to the department's actions.

4. Dispute Resolution Mechanism:
The judgment emphasized the existence of a dispute resolution mechanism in the agreements between the petitioner and the Public Works Department. It was noted that instead of seeking supplementary agreements or making existing contracts GST neutral, the petitioner should utilize the mechanism provided in the agreements for dispute resolution. The authorities were expected to address any disputes objectively and expeditiously, preferably within three months from the date of communication of the order.

In conclusion, both writ petitions were disposed of in similar terms, emphasizing the need for the petitioner to address grievances through the dispute resolution mechanism provided in the agreements with the Public Works Department.