Contractual GST reimbursement under a works contract survived missing schedule documents, and arbitrary refusal was held unlawful.

A works contract executed after 01.07.2017 was governed by the GST regime, so the contractor could not limit tax liability to the earlier VAT rate merely on the basis of prior correspondence where no such term was incorporated in the final work order and agreement. Under Clause 42.1, however, reimbursement of Central or State taxes paid on proof of payment remained a substantive contractual entitlement. The absence of Part-II of Schedule A did not defeat that entitlement where GST returns and supporting material showed payment, and refusal to reimburse admitted tax payments was treated as arbitrary and violative of Article 14. Writ relief was therefore held maintainable on the contractual issue, with reimbursement directed on proof of payment and interest.

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Issues: (i) whether the contractor was liable to bear GST at the higher rate under the post-01.07.2017 regime notwithstanding prior correspondence and the terms of the work order and agreement; (ii) whether, under Clause 42.1 of the agreement, the contractor was entitled to reimbursement of the GST actually paid by him on proof of payment, despite the absence of Part-II of Schedule A.

Issue (i): whether the contractor was liable to bear GST at the higher rate under the post-01.07.2017 regime notwithstanding prior correspondence and the terms of the work order and agreement.

Analysis: The contract and work order were executed after the GST regime came into force, and the incidence of tax on the works contract was therefore governed by the CGST and TSGST laws. A prior indication in correspondence could not override the final agreement, and the contractor could not insist on liability at the earlier VAT rate in the absence of an incorporated contractual term to that effect.

Conclusion: The petitioner was not entitled to restrict his tax liability to the earlier 6% rate merely on the basis of prior letters.

Issue (ii): whether, under Clause 42.1 of the agreement, the contractor was entitled to reimbursement of the GST actually paid by him on proof of payment, despite the absence of Part-II of Schedule A.

Analysis: Clause 42.1 provided for reimbursement of Central or State taxes, including taxes on completed items of work, on proof of payment. The absence of Part-II of Schedule A could not defeat the substantive contractual entitlement where the petitioner produced GST returns and supporting material showing payment. The refusal to reimburse such admitted payments, despite the contractual stipulation, was held to be arbitrary and violative of Article 14. The Court also held that the dispute involved interpretation of the contract and did not bar writ relief.

Conclusion: The petitioner was entitled to reimbursement of the GST paid by him, less any amount already reimbursed, with interest at 12% per annum from the respective dates of payment.

Final Conclusion: The writ petition succeeded and the respondents were directed to refund the proven GST amount payable under the contract together with interest, recognizing the contractual reimbursement obligation and rejecting the plea based on the absence of Schedule A.

Ratio Decidendi: Where a works contract executed under the GST regime contains an express reimbursement clause for taxes paid on proof of payment, the State cannot deny reimbursement merely because an attached schedule is missing, and arbitrary refusal to honor such a contractual obligation is amenable to writ relief.

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