Govt. Liable to Pay GST for Existing Contracts | HC Advised to Seek Resolution With Govt. First and Resort to Legal Action If Unresolved

Case Details: Babun Rakshit v. State of West Bengal - [2023] 156 taxmann.com 477 (Calcutta)

Judiciary and Counsel Details

• • Ajay Kumar Gupta, J.
  • Himangshu Kumar Ray, Abhilash Mittal & Prosenjit Das, Advs. for the Petitioner.
  • Pretom Das for the Respondent.

Facts of the Case

The petitioner is a proprietor who received work orders from the Government contractee during the pre-GST regime and post-GST regime to do several constructions for which the process of estimating and tendering was started in pre-GST regime. The writ petition was filed for directing the Govt. to pay the GST liability incurred on such works contracts as the Schedule of Rates in the Contract was not updated by incorporating the applicable GST amount for Bill preparation.

The petitioner contended that GST is an indirect tax that is to be collected by the supplier from the recipient and paid to the concerned authorities. Therefore, the petitioner is entitled to receive such GST amount from the Government Contractee. The petitioner submitted that he should not be deprived and penalised for inaction of the Government Contractee.

High Court Held

The High Court observed that the Government Contractee has to bear the additional tax liability for execution of subsisting Government contracts. The HC held that final decision will be taken up by the Additional Secretary, after giving an opportunity being heard to the petitioner, considering all the judgments of the Supreme court and various High Courts upon which the petitioner intends to rely. Till the final decision is taken by the Additional Chief Secretary, no coercive action shall be taken against the petitioner.