Contractor entitled to GST reimbursement when tender required GST-exclusive quotes, corporation must pay GST component.

The Kerala HC ruled in favor of the petitioner contractor regarding GST reimbursement in a works contract dispute. The court followed precedent from Kerala Land Development Corporation Limited case, holding that where tender conditions required quotes excluding GST, the contractor cannot be liable for GST payment. Since GST is ultimately borne by the service beneficiary, the respondent corporation must pay the GST component for work performed. The court set aside impugned orders and allowed the appeal, establishing that contractors quoting GST-exclusive amounts per tender requirements are entitled to GST reimbursement from the contracting authority.

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Issues:
Challenging requirement to pay GST for works contract awarded.

Details:
The writ petitions challenge the action of the respondents in requiring the petitioner to pay GST for the works contract awarded to them. The specific works contracts involved are the upgradation of Painavu - Thannikandom - Ashoka Kavala road and BC Overlay of Adoor to Chengannoor. The petitioner, a limited company engaged in construction, was awarded these contracts as the lowest tenderer. The bids were made excluding GST as per the tender notification. However, later, the claim for the GST amount was rejected, stating that the amount specified in the tender was inclusive of all taxes.

The petitioner argued that the bid documents specifically required quoting the total contract amount excluding GST, and the financial bid document required quoting the amount less GST. The respondents contended that even though the form required quoting the amount less GST, the contract itself provided that the contract amount would be inclusive of all taxes, including GST. The respondents also claimed that the provision in the form for quoting the price excluding GST was a typographical error, which was later corrected for subsequent works. The respondents further argued that the petitioner, being a works contractor, should have been aware of their liability to pay GST when entering into the contract.

The Court considered the arguments and noted that the bid documents indeed sought quoting of the total contract amount excluding GST. Referring to a previous judgment, the Court held that since the petitioner was required to make a quote excluding the GST amount, they cannot be held liable for payment of GST. The Court ruled in favor of the petitioner, setting aside the impugned orders and directing the respondents to consider the petitioner's claim for the GST element and take necessary steps for release of the amounts due within two months from the date of the judgment.

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