GST liability on pre-GST contracts must follow State transition orders; contrary recoveries and rejection were quashed.

Pre-GST contracts executed before 1 July 2017 had to be assessed under the State Government Orders governing transition from VAT to GST, because those orders prescribed the method for computing GST liability on subsisting contracts and allocating any tax differential to the purchaser. The Court noted that the methodology had been consistently applied in similar matters and that the orders themselves were not under challenge. On that basis, the computation rejected by the authorities could not be sustained. The petitioner was entitled to liability computation in accordance with the Government Orders, the rejection orders were quashed, and any recovery made contrary to that methodology was directed to be refunded.

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Issues: Whether the petitioner was entitled to have GST liability on pre-01.07.2017 contracts computed in accordance with the State Government Orders governing transition from VAT to GST, and whether recoveries made contrary to that methodology were liable to be refunded.

Analysis: The contracts were entered into before the onset of GST, and the State had issued Government Orders prescribing the method for computing GST liability in respect of such subsisting contracts. Those orders provided that any difference arising from the change in tax regime would be borne by the purchaser and set out a transparent methodology for estimating subsumed tax. The same methodology had been consistently applied in similar matters, and the orders themselves had not been challenged. On that basis, the rejected computation adopted by the authorities could not be sustained.

Conclusion: The petitioner was entitled to computation of liability in terms of the Government Orders, the impugned rejection orders were quashed, and any recovery contrary to that methodology was directed to be refunded.

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