2025 (2) TMI 783 - HC - GST

Seeking release of admitted liability towards the difference of GST - HELD THAT - Reliance placed on an order Division Bench of this Court in M/S APEX STRUCTURE PVT. LTD. 2024 (12) TMI 928 - MADHYA PRADESH HIGH COURT wherein it is observed that Respondent No.4 which is a State GST Department according to which also the rate of GST has been enhanced from 12% to 18% and same is liable to be paid by respondent No.2 which is a Government Entity. Petition disposed off.

Summary

The High Court of Madhya Pradesh issued a judgment regarding a writ petition filed under Article 226 of the Constitution of India. The petitioner, a Company/Proprietorship Firm engaged in construction work, sought reimbursement of the extra GST amount paid at a higher rate than what was applicable. The petitioner had been awarded various construction works by respondent No.2, a Public Enterprise classified as a Government Entity under the GST Act.The petitioner had been paying GST on the payments received for executed work. Initially, the GST rate was 12%, which was later increased to 18% from 01.01.2022. Despite this increase, respondent No.2 continued to pay bills at the lower rate of 12%, while the petitioner paid the correct rate of 18%. The petitioner requested the arrears of GST at the increased rate to be paid, and respondent No.2 acknowledged the liability but cited lack of approval from the State Government.Respondents No.2 & 3 raised objections regarding the maintainability of the writ petition and the availability of alternative remedies under the Arbitration Act. However, the Court noted that no disputed questions of fact were involved, precluding the need for dispute resolution mechanisms under the agreement.The State GST Department confirmed the increase in the GST rate from 12% to 18%, holding respondent No.2, a Government Entity, responsible for the payment. The Court directed respondent No.2 to pay the petitioner the difference in GST amount at the correct rate of 6% from 01.01.2022 to 30.09.2022 within three months of receiving the order. Failure to comply would entitle the petitioner to interest at a rate of 6% per annum from the entitlement date.The Court disposed of the writ petition in line with a previous order dated 12.12.2024, applying the same terms and directions issued in that case to the present matter. The judgment established the principle that Government Entities are liable to pay GST at the correct rate as per the prevailing regulations, and failure to do so can result in a court-ordered reimbursement with interest.In conclusion, the Court's decision in this case clarified the obligations of Government Entities regarding GST payments and emphasized the importance of adhering to the prescribed rates to avoid legal repercussions.