2018 (7) TMI 1824 - HC - GST

Quantum of GST - specified works already undertaken by the petitioner - the concerned officer is awaiting directions from the Head Office - Circular No.GST/002/17, dated 10.08.2018 - Held that - I cannot immediately accede to the stand taken by the respondents because, as is clear from Ext.P5 circular, the Head Office, which is to mean the Managing Director, has already taken a decision to compensate the contractors to the extent of the GST paid by them on account of the fact that, at the time when the contract was entered into, the GST regime had not been implemented - I, therefore, fail to understand why the Deputy Chief Engineer should take a stand in the counter affidavit that he is still awaiting directions from the Head Office, when the circular makes it clear that all such payments are to be made to the contractors - petition disposed off.

Summary

Issues:
1. Interpretation of contract terms regarding GST payment under the GST regime.
2. Compliance with circular issued by Water Authority regarding GST payment.
3. Authority of Deputy Chief Engineer to make payments without Head Office permission.

Analysis:
1. The petitioner, a Private Limited Company, undertook works for Kerala Water Authority before the GST regime was implemented in the State. The issue arose regarding the calculation and adjustment of GST under the contract terms. The petitioner claimed that the Water Authority agreed to bear any excess taxes under the GST regime as per the contract terms.

2. The Water Authority, as per a circular, accepted the responsibility to absorb the difference between GST paid and other taxes under the GST regime applicable at the time of bidding. The petitioner completed the work, paid the GST, and made representations to the Water Authority for payment based on the circular. The court noted that the Water Authority had not disputed the payment of GST by the petitioner.

3. The petitioner argued that the Deputy Chief Engineer should honor the payments as per the circular without awaiting further directions from the Head Office. The respondents stated that the Deputy Chief Engineer required permission from the Head Office to make payments related to GST. The court found this reasoning untenable, as the circular issued by the Managing Director already directed payments to be made to contractors.

4. The court held that since there was no dispute regarding GST payment or work completion by the petitioner, the competent authority should make a decision promptly without undue delay. The court directed the Managing Director of the Water Authority to review the petitioner's representations and issue orders based on the circular within one month. If the amounts were found due to the petitioner, they were to be paid within two months from the judgment date.