2019 (11) TMI 36 - HC - GST

Petitioner Liable for GST Payment per Tender Terms, Claims Rejected

JILMON JOHN Versus STATE OF KERALA, THIRUVANANTHAPURAM, THE SECRETARY TO THE GOVERNMENT, FINANCE DEPARTMENT, THIRUVANANTHAPURAM AND THE SUPERINTENDING ENGINEER, ERNAKULAM

JILMON JOHN Versus STATE OF KERALA, THIRUVANANTHAPURAM, THE SECRETARY TO THE GOVERNMENT, FINANCE DEPARTMENT, THIRUVANANTHAPURAM AND THE SUPERINTENDING ... Issues Involved:1. Whether the petitioner is liable to pay tax under the Central Goods and Services Tax Act, 2017 (GST).2. Whether the petitioner is entitled to reimbursement of additional tax imposed by GST or refund of the Earnest Money Deposit (EMD).3. Whether the conditions stipulated in the tender notice (Ext.P1) are binding and enforceable.4. Whether the respondents acted within their jurisdiction in demanding compliance with GST.Issue-wise Detailed Analysis:1. Liability to Pay Tax under GST:The core issue is whether the petitioner is liable to pay the tax as per the GST Act, 2017. The petitioner contended that as per Ext.P1 notice inviting tender, the tax liability was specified under the Kerala Value Added Tax Act, 2003 (VAT) at 4%. However, the court observed that clause 44 of Ext.P1 stipulates that the bidder shall be responsible for the payment of sales tax as per rules in force from time to time, meaning the petitioner is liable to pay any tax introduced after the tender submission, including GST. The court emphasized that the introduction of GST was foreseeable, and the petitioner should have accounted for this potential change when quoting rates.2. Reimbursement of Additional Tax or Refund of EMD:The petitioner requested either reimbursement of the additional tax imposed by GST or the release and refund of the EMD of Rs. 2,00,000/-. The court noted that the petitioner had previously submitted representations requesting the same, which were not considered favorably by the respondents. The court highlighted that the petitioner's claim of additional tax liability was refuted by the respondents, who demonstrated through detailed calculations (Ext.R3(e)) that the petitioner would benefit from the input tax credit system under GST, resulting in a tax benefit rather than an additional liability.3. Binding and Enforceability of Tender Conditions:The petitioner argued that the conditions under Ext.P1 did not include GST at the time of tender submission and hence could not be enforced later. The court, however, pointed out that clause 44 of Ext.P1 clearly stated that the bidder is responsible for paying taxes as per the rules in force from time to time. This clause implies that any future tax changes, including GST, would be applicable. The court found that the petitioner, by agreeing to clause 44, had accepted the possibility of tax changes and was therefore bound by this condition.4. Jurisdiction and Legality of Respondents' Actions:The petitioner claimed that the respondents' actions were without jurisdiction and illegal. The court disagreed, stating that the respondents acted within their rights as per the terms of the tender notice (Ext.P1) and subsequent agreements (Exts.R3(a) and R3(b)). The court also referenced a Government Order dated 27.1.2018, which clarified the application of GST to PWD contracts, further justifying the respondents' demands for compliance with GST.Conclusion:The court concluded that the petitioner is liable to pay the GST as stipulated in the tender documents and that the conditions under Ext.P1 are binding. The petitioner's request for reimbursement of additional tax or refund of EMD was denied. The court dismissed the writ petition, affirming that the respondents acted within their jurisdiction and in accordance with the contractual obligations agreed upon by the petitioner. The court emphasized the importance of adhering to the terms of the contract and dismissed the petition for lack of merit.