Government must bear additional GST liability when Schedule of Rates not updated for works contracts

The Calcutta HC directed that government authorities must bear additional GST liability for works contracts executed before and after July 1, 2017, where Schedule of Rates were not updated to incorporate applicable GST rates. The petitioner contractor was granted liberty to file representations before the Additional Chief Secretary, Finance Department within four weeks, seeking direction on appropriate respondent for GST remittance on works contract services spanning pre and post-GST implementation periods.

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Issues involved:
The issues involved in this case include the petitioner's request for direction to remit the amount of GST on works contract services provided before and after the introduction of the GST Act, the contention regarding liability to pay tax and interest under Section 73 of the GST Act, and the need to address the additional tax liability for government contracts awarded before and after the GST regime.

Summary:
The petitioner filed a writ petition u/s Article 226 of the Constitution of India seeking direction for the remittance of GST on works contract services provided pre and post the introduction of the GST Act. The petitioner, a registered business dealing with works contracts, received work orders during the pre-GST and post-GST regime. Despite notification clarifying the applicability of GST rates on post-GST contracts, the Government Contractee failed to pay the GST tax and interest demanded by the authorities.

The respondent issued a notice under Section 73 of the GST Act, requiring the petitioner to pay tax and interest. The petitioner argued that the Government Contractee is liable to pay the tax and interest as per relevant notifications and statutes. The petitioner referred to various court decisions to support their claim.

On the other hand, the respondent contended that the petitioner is liable to pay the tax and interest under Section 73 of the GST Act. The court noted that the respondent authorities must bear the additional tax liability for government contracts awarded before and after the GST regime without updating the Schedule of Rates to incorporate applicable GST.

The court disposed of the writ petition, allowing the petitioner to file representations before the Additional Chief Secretary, Finance Department, Government of West Bengal. The Additional Chief Secretary was directed to make a decision within four months after consulting relevant departments. No coercive action was to be taken against the petitioner during this period. The court emphasized that the decision should be reasoned and consider all relevant judgments.

In conclusion, the writ petition was disposed of with no order as to costs, and urgent copies of the judgment were to be provided to the respective advocates. All parties were instructed to act based on the official copy of the order from the court's website.

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