2017 (10) TMI 783 - HC - GST

Analysis of GST Impact on Works Contracts by Court

Coimbatore Corporation Contractors Welfare Association Versus State of Tamil Nadu, The Commissioner of Municipal Administration, The Commissioner, Coimbatore Corporation, The Chief Accounts Officer, Coimbatore Corporation, The Cheif Engineer, Coimbatore Corporation, The Commissioner, GST Policy Section, The Commissioner of Commercial Taxes

The court addressed issues concerning tax liabilities post the enactment of the Central Goods and Services Tax Act, 2017, particularly focusing on Works ... Works contract - levy of VAT or GST - case of petitioner is that the contract works for which the agreements were executed prior to 01.07.2017, GST cannot be imposed and 2% VAT alone is applicable - Held that: - there will be a direction to the Commissioner of Commercial Taxes to consider the representation given by the petitioner/ association and pass orders on merits and in accordance with law, within a period of four weeks from the date of receipt of a copy of this order - petition allowed by way of remand. Issues:1. Interpretation of tax liabilities post the enactment of the Central Goods and Services Tax Act, 2017.2. Representation by the petitioner regarding the imposition of GST on works contracts.3. Impleadment of additional respondents - Secretary to Government, Commercial Taxes Department, and Commissioner of Commercial Taxes.4. Consideration of representations by the Commissioner of Commercial Taxes.5. Direction for the Commissioner of Commercial Taxes to pass orders on merits within a specified timeframe.Issue 1 - Interpretation of tax liabilities post GST enactment:The petitioner, an association of Road Contractors, highlighted the issue of tax liabilities post the introduction of the Central Goods and Services Tax Act, 2017. They argued that the Central Government's notification levying 6% tax on Works Contract conflicted with the State Government's power to impose additional Works Contract tax. This led to a potential total tax liability of 12% on contractors, prompting the petitioner to submit representations to the respondents.Issue 2 - Representation against GST imposition on pre-GST contracts:The petitioner contended that contracts executed before the GST implementation date should only be subject to the 2% VAT and not the newly imposed GST. Despite multiple representations to the respondents, no orders were passed, leading the petitioner to request that any additional tax be remitted by the respondents if contractors were compelled to pay beyond the 2% VAT.Issue 3 - Impleadment and response by additional respondents:Upon the court's direction, the petitioner impleaded the Secretary to Government, Commercial Taxes Department, and the Commissioner of Commercial Taxes. The Government Advocate informed the court that discussions were ongoing to determine the relief entitled to the petitioner. The court emphasized the importance of the Commissioner of Commercial Taxes responding to the representations due to their expertise in tax matters.Issue 4 - Consideration of representations by the Commissioner of Commercial Taxes:In light of the representations and the stand taken by the parties, the court directed the Commissioner of Commercial Taxes to evaluate the petitioner's submissions and issue orders within four weeks. The petitioner was granted a personal hearing, and copies of the representations along with the court's order were to be provided to the Commissioner for compliance.Issue 5 - Direction for timely response by the Commissioner of Commercial Taxes:The court mandated that the Commissioner of Commercial Taxes must consider the petitioner's representations promptly and in adherence to legal principles. The Commissioner was instructed to provide a decision within four weeks from receiving the court's order, ensuring that the petitioner's concerns regarding tax liabilities under the new GST regime are appropriately addressed.