2018 (7) TMI 1824 - HC - GST

Court orders Water Authority MD to review petitioner's case & issue orders within one month. Payment due in two months.

The court directed the Managing Director of the Water Authority to review the petitioner's representations and issue orders based on the circular within ... Compensation for GST paid - contractual allocation of tax burden - circular binding on administrative authority - administrative decision-making and delay - subsumption of earlier indirect taxes into GSTCompensation for GST paid - contractual allocation of tax burden - circular binding on administrative authority - Entitlement of the petitioner to payment of GST amounts already deposited in execution of contracts, in terms of the Kerala Water Authority circular dated 10.08.2017 (Ext.P5). - HELD THAT: - The petitioner entered into contracts before implementation of GST and performed the works after GST came into force, having paid GST which exceeded the taxes contemplated at the time of bidding. Ext.P5 explicitly directs that the difference between GST paid and the taxes subsumed by GST at the time of bidding shall be absorbed by the Kerala Water Authority on production of payment receipts. The counter-affidavit does not dispute that the petitioner completed the works or that GST was paid; instead it asserts that local officers are awaiting directions from the Head Office. Since Ext.P5 emanates from the Head Office (the Managing Director) and mandates absorption of the difference, the Head Office's circular furnishes a decision in principle and there is no tenable basis for further inaction. It is therefore imperative that the competent authority consider the petitioner's representations with reference to Ext.P5 and, if amounts are found due in accordance with the circular, ensure payment without further delay. [Paras 4, 9, 10, 11]The Managing Director is directed to consider the petitioner's representations in light of Ext.P5 and to pass orders; if amounts are found due as per the circular, they shall be paid within the timeline fixed by the Court.Administrative decision-making and delay - circular binding on administrative authority - Obligation of the Kerala Water Authority to expeditiously decide representations and to avoid indefinite pendency where no dispute on payment or workmanship is asserted. - HELD THAT: - The Court found that keeping claims pending without a substantive ground-when the Head Office has already issued a circular directing absorption of the differential tax-is unreasonable. The respondents' plea of awaiting Head Office directions is inconsistent with the existence of Ext.P5. In the circumstances, the Court ordered the first respondent to decide the representations promptly and set a definitive timetable for decision and, where payable, for disbursement of amounts. [Paras 7, 9, 11]Respondents must decide the representations expeditiously-within one month-and, where amounts are due under the circular, ensure payment within two months thereafter.Final Conclusion: Writ petitions allowed in part: the Managing Director of Kerala Water Authority is directed to consider the petitioner's representations in terms of circular No.GST/002/17 (Ext.P5) and to pass orders within one month; if amounts are found owing in accordance with the circular, payment shall be made within two months of such order. Issues:1. Interpretation of contract terms regarding GST payment under the GST regime.2. Compliance with circular issued by Water Authority regarding GST payment.3. Authority of Deputy Chief Engineer to make payments without Head Office permission.Analysis:1. The petitioner, a Private Limited Company, undertook works for Kerala Water Authority before the GST regime was implemented in the State. The issue arose regarding the calculation and adjustment of GST under the contract terms. The petitioner claimed that the Water Authority agreed to bear any excess taxes under the GST regime as per the contract terms.2. The Water Authority, as per a circular, accepted the responsibility to absorb the difference between GST paid and other taxes under the GST regime applicable at the time of bidding. The petitioner completed the work, paid the GST, and made representations to the Water Authority for payment based on the circular. The court noted that the Water Authority had not disputed the payment of GST by the petitioner.3. The petitioner argued that the Deputy Chief Engineer should honor the payments as per the circular without awaiting further directions from the Head Office. The respondents stated that the Deputy Chief Engineer required permission from the Head Office to make payments related to GST. The court found this reasoning untenable, as the circular issued by the Managing Director already directed payments to be made to contractors.4. The court held that since there was no dispute regarding GST payment or work completion by the petitioner, the competent authority should make a decision promptly without undue delay. The court directed the Managing Director of the Water Authority to review the petitioner's representations and issue orders based on the circular within one month. If the amounts were found due to the petitioner, they were to be paid within two months from the judgment date.