Pre-GST works contract pricing must be reworked for GST where no schedule of rates was supplied

A pre-GST works contract entered into on an item-wise quotation basis was held to fall under paragraph 10(a) of G.O.Ms.No.296, because no schedule of rates had been enclosed with the tender notification. On that footing, paragraph 10(c) was treated as inapplicable and the contract price had to be reworked after GST so that the additional tax burden would be borne by the purchaser. The petitioner was therefore entitled to a revised agreement, and the contractual terms were to be recalculated to reflect the GST component accordingly.

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Issues: Whether the contract price, after introduction of GST, was to be reworked under paragraph 10(a) of G.O.Ms.No.296 Finance (Salaries) Department dated 09.10.2017 and whether the petitioner was entitled to a revised agreement without being saddled with the additional tax burden.

Analysis: The contract had been entered into before GST and the quotation included tax components. The work was found to be item-wise and no schedule of rates had been enclosed with the tender notification. On that basis, paragraph 10(c) was held inapplicable and the case was held to fall under paragraph 10(a). The governing policy under the Government Order was that the additional tax burden arising from GST was to be borne by the purchaser, and the contract terms therefore required reworking accordingly.

Conclusion: The petitioner was entitled to reworking of the contract price under paragraph 10(a) and to a revised agreement, with the additional GST burden to be borne by the respondent Board.

Final Conclusion: The writ petition was allowed and the respondents were directed to recalculate the tax component and revise the contractual terms accordingly.

Ratio Decidendi: Where a pre-GST works contract is item-wise and no departmental schedule of rates is supplied, the post-GST reworking of the contract price must be undertaken under the provision governing bid-based estimation, with the additional tax burden shifting to the purchaser.

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