Contractor's claim for additional GST payment dismissed as bid already included all taxes per agreement

The HC dismissed the writ petition filed by a contractor seeking additional GST payment from the state corporation. The court held that the contractor's bid already included all taxes including GST as per the agreement's scope of work clause, and claiming additional GST would constitute double payment. The court noted that government orders reduced GST rates on works contracts to balance pre and post-GST regimes, ensuring no adverse impact on the contractor. The petitioner failed to produce evidence of GST payment or input tax credit claims. The court directed the contractor to pursue remedies through the arbitration clause within four weeks, as the specific arbitration provision in the agreement precluded writ jurisdiction for the relief sought.

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Issues involved:
The issues involved in this case are the petitioner seeking direction for payment of GST liability, respondent's failure to pay GST amount, applicability of government orders u/s G.O.Ms.No.264 and G.O.Ms.No.296, availability of alternative remedies u/s Central Goods and Services Act, 2017, and interpretation of arbitration clause in the agreement.

Details of the Judgment:

Petitioner's Case:
The petitioner bid for a construction project under PMYA scheme, and after negotiation, the rates were accepted by the respondent. The agreement expressly excluded GST from the total consideration to be paid by the respondent. The petitioner submitted proof of GST payment and requested reimbursement, which was not fully honored, leading to the writ petition.

Respondent's Defense:
The respondent argued that the writ petition was not maintainable as alternative remedies were available u/s Central Goods and Services Act, 2017. They also questioned the petitioner's eligibility for input tax credit and highlighted the presence of an arbitration clause in the agreement.

Court's Analysis:
The court examined the tender document, agreement clauses, and government orders to determine the tax obligations. It noted that the agreement rates were inclusive of all taxes, including GST. The court emphasized that post-GST, all taxes were consolidated into GST, and additional GST claims by the petitioner would amount to double taxation.

Government Orders and Methodology:
The court discussed G.O.Ms.No.264 and G.O.Ms.No.296, which provided a methodology for estimating subsumed taxes in the contracted value of work. It highlighted the necessity for transparent estimation of subsumed tax and the need for supplemental agreements based on revised values.

Arbitration Clause:
The court pointed out the presence of an arbitration clause in the agreement, stating that disputes should be settled through arbitration as per the terms of the contract. The court directed the petitioner to invoke the arbitration clause within four weeks from the date of the order.

Conclusion:
The court disposed of the writ petition, allowing the petitioner to pursue arbitration as per the agreement. The miscellaneous petition was closed, and no costs were awarded in the case.

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