Court Orders Commissioner to Review GST Imposition on Works Contracts

The court directed the Commissioner of Commercial Taxes to review the association's representation regarding the imposition of GST on works contracts executed before 01.07.2017. The Government Advocate highlighted a government order reducing GST on works contracts for Government work from 18% to 12%. The petitioner was granted a personal hearing, and the Commissioner was instructed to issue orders within four weeks. The judgment stressed the importance of promptly addressing the petitioner's concerns and ensuring a fair assessment of tax implications under both the TNVAT Act and the CGST Act, 2017.

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Issues: Interpretation of Works Contract Tax under TNVAT Act and Central Goods and Services Tax Act, 2017; Representation by association regarding imposition of GST on works contracts executed before 01.07.2017.

Analysis:
The petitioner, an association registered under the Tamil Nadu Societies Act, raised concerns post the enactment of the Central Goods and Services Tax Act, 2017, regarding the imposition of 6% tax by the Central Government on works contracts. The association contended that the State Government could also levy tax, making the total tax liability 12%. Representations were made to the respondents stating that contracts executed pre-GST implementation should only be subject to 2% VAT. The association also argued that any additional tax should be remitted by the respondents if imposed. The petitioner was directed to include the Secretary to Government, Commercial Taxes Department, and the Commissioner of Commercial Taxes in the case for a comprehensive review.

The Government Advocate informed the court about G.O. Ms.No.264, which reduced the GST on works contracts for Government work from 18% to 12% to balance taxes pre and post GST regime. The court directed the Commissioner of Commercial Taxes to consider the association's representation and issue orders within four weeks. The petitioner was granted a personal hearing, and copies of the representation along with the court order were to be submitted to the Commissioner for compliance. The judgment emphasized the need for a prompt response to the petitioner's concerns and a fair assessment of the tax implications on works contracts under both the TNVAT Act and the CGST Act, 2017.

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