Pre-GST works contracts continuing after GST must be adjusted under the post-GST framework and applicable Government Order.

A pre-GST works contract that continued after GST came into force had to be quantified under the post-GST framework and the applicable Government Order. The court noted that the relevant works-contract service attracted 12% GST under the CGST regime, and that the State Government Order already in force required the original contract value to be adjusted after identifying the subsumed tax component and then adding GST as applicable. The parties were therefore directed to complete the quantification exercise on that basis, while the ongoing work continued uninterrupted.

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Issues: Whether GST payable on the ongoing works contract executed under a pre-GST agreement was to be worked out under the post-GST regime and the applicable Government Order.

Analysis: The contract preceded the GST regime, but the work continued after GST became operational. The applicable rate for the relevant works-contract service was 12% under the CGST framework, and the governing State Government Order was already in force. The operative clauses of that Government Order required existing works contracts to be dealt with by adjusting the original contracted value after arriving at the subsumed tax component and then adding GST as applicable. The quantification exercise was therefore to be carried out by both sides on that basis, without halting the ongoing work.

Conclusion: The GST liability was to be determined in accordance with the applicable Government Order and the CGST regime, with the parties required to complete quantification accordingly.

Final Conclusion: The writ petitions were disposed of by directing the parties to proceed under the applicable post-GST contractual adjustment mechanism, while the works were to continue uninterrupted.

Ratio Decidendi: Where a pre-GST works contract continues after GST comes into force, the tax component must be adjusted under the governing post-GST framework and the applicable administrative order, rather than by treating the original contract value as frozen.

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