2023 (8) TMI 396 - HC - GST

Reimbursement of GST in respect of the works contract - Scope of tender / agreement - respondents contend that even though the form required the quoting of the amount less GST, since the contract itself provided that the contract amount would be inclusive of all taxes, GST has to be suffered by the petitioner - HELD THAT - The Division Bench of this Court in THE KERALA LAND DEVELOPMENT CORPORATION LIMITED AND ORS VERSUS SEBASTIAN JOSE AND ORS. 2022 (6) TMI 1415 - KERALA HIGH COURT has specifically considered an identical issue. It was found that the petitioner therein had bid for the work and had quoted the amount specifically excluding the component of GST from the quote in view of the condition contained in the notice inviting tender. It was further found that GST being a tax to be suffered by the ultimate beneficiary, the Corporation for whom the work is done by the contractor has to remit the same. It was held that The learned single judge was right in declaring that the GST component was not to be included as per clause 3.3.3 of Ext.P1 and the direction to pay the GST component by respondents 2 and 3 is in tune with the clauses of Ext.P1 and hence there are no ground to interfere with the judgment of the learned Single Judge, and hence the writ appeal is dismissed. Since the petitioner was required to make a quote excluding the GST amount, it is opined that the petitioner cannot be mulcted with a liability of payment of GST. The respondent who is the ultimate beneficiary of the services performed by the petitioner has to pay the GST in respect of the work carried out. The impugned orders are set aside - appeal allowed.

Summary

Issues:
Challenging requirement to pay GST for works contract awarded.

Details:
The writ petitions challenge the action of the respondents in requiring the petitioner to pay GST for the works contract awarded to them. The specific works contracts involved are the upgradation of Painavu - Thannikandom - Ashoka Kavala road and BC Overlay of Adoor to Chengannoor. The petitioner, a limited company engaged in construction, was awarded these contracts as the lowest tenderer. The bids were made excluding GST as per the tender notification. However, later, the claim for the GST amount was rejected, stating that the amount specified in the tender was inclusive of all taxes.

The petitioner argued that the bid documents specifically required quoting the total contract amount excluding GST, and the financial bid document required quoting the amount less GST. The respondents contended that even though the form required quoting the amount less GST, the contract itself provided that the contract amount would be inclusive of all taxes, including GST. The respondents also claimed that the provision in the form for quoting the price excluding GST was a typographical error, which was later corrected for subsequent works. The respondents further argued that the petitioner, being a works contractor, should have been aware of their liability to pay GST when entering into the contract.

The Court considered the arguments and noted that the bid documents indeed sought quoting of the total contract amount excluding GST. Referring to a previous judgment, the Court held that since the petitioner was required to make a quote excluding the GST amount, they cannot be held liable for payment of GST. The Court ruled in favor of the petitioner, setting aside the impugned orders and directing the respondents to consider the petitioner's claim for the GST element and take necessary steps for release of the amounts due within two months from the date of the judgment.