GST treatment for continuing works contracts requires revision of contract value and subsumed tax adjustment under the operative framework.

A pre-GST works contract that continued after 01.07.2017 was treated as governed by the operative GST contractual framework and the relevant State Government order. The applicable clauses were identified as paragraph 10(a) for contracts up to 30.06.2017 and paragraph 12 for contracts on and from 01.07.2017, with the contract falling within the works contract/composite supply framework under GST. On that basis, the parties were required to compute the subsumed tax and revise the agreement value accordingly, and the quantification exercise was to be completed within the stipulated time.

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Issues: Whether GST liability on a pre-GST works contract executed after commencement of the GST regime was to be governed by the post-GST rate structure and the State Government order, and whether the contract value required quantification and adjustment under the revised framework.

Analysis: The contract was executed before GST came into force, but the work continued after 01.07.2017 when GST became operational. The applicable tax rate was not in dispute, and the contract fell within the works contract/composite supply framework under GST. The earlier State Government order governing works contracts was treated as operative, and the applicable clauses were identified as paragraph 10(a) for contracts up to 30.06.2017 and paragraph 12 for contracts on and from 01.07.2017. On that basis, the parties were required to work out the subsumed tax and revise the agreement value accordingly.

Conclusion: The dispute was resolved by holding that the parties were governed by paragraphs 10(a) and 12 of the operative Government Order, and the quantification exercise was to be completed within the stipulated time.

Final Conclusion: The writ petition was disposed of by applying the existing GST-related contractual framework and directing quantification and consequential adjustment of the contract value.

Ratio Decidendi: Where a pre-GST works contract continues into the GST regime, the tax adjustment is governed by the applicable post-GST contractual and governmental framework, including revision of contract value by reference to subsumed tax and applicable GST.

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