TaxTMI 
TaxTMI 
2025 (8) TMI 855
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..... The PWD (Border Roads), Government of Assam floated a tender by electronic process on 18.01.2019 in respect of construction of road namely "L 138-Paschimchaysimana to Baladmari via Rahmania MEM, Barpeta (package No. AS 01211)" in the Barpeta and other Districts of Assam under the Pradhan Mantri Gram Sadak Yojana (PMGSY), 2018-2019, Batch-I. The tender was invited in item rate bid wise. The work for construction of the road also included maintenance of the road for five years. The item rate bids were invited by the department by the electronic tendering system by the tender notice dated 18.01.2019. The bill of quantities giving item wise quantities for the work to be executed was also included. The bidders were required to fill up the rate and total amount. The last date for the receipt of the tender through e-tendering was 04.02.2019 till 1600 hours. The bid was to be submitted item wise as per attached proforma on the bill of quantities. The petitioner submitted his bid pursuant to the e-tendering process. The Petitioner submitted his bid for the above work for Rs. 17,24,37,355/- which included Rs. 1,02,72,000/- for maintenance. Upon evaluation of the bids received, the bid offe....
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....bmitted that at present the rate of GST is 12% for such contract work being executed by the petitioner. It is the apprehension of the petitioner that for failure to deposit the GST amount, petitioner may have to face adverse consequence under the provisions of law. It is further submitted that instead of adding the GST to the billed amount raised and releasing it to the petitioner, the respondent authorities have instead deducted CGST and SGST from the running bills of a petitioner at the rate of 2% and consequently the respondents have deducted an amount of Rs. 16,68,200/- up to the fourth running bill illegally. It is submitted that being aggrieved, the petitioners filed a representation dated 09.02.2022 before the Chief Engineer, PWD (Border Roads), Assam, raising his grievances and the prejudice faced by the petitioner for Non-Payment of GST to the petitioner in respect of the running bills released. However, no response was received from the respondent department in respect of the representation filed. 4. It is submitted by the learned Senior counsel for the petitioner that the tender conditions clearly provided that the bidders should quote their bids "exclusive of GST". H....
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....vided into four categories, namely, Category A relates to work sanction prior to 01.07.2017 under different phases of PMGSY and which are ongoing; Category B relates to work sanction after 01.07.2017 under different phases of PMGSY where GST has not been accounted for in the original proposal wherein tenders have been completed; Category C are pertaining to work sanctioned after 01.07.2017 under different phases of PMGSY where GST has not been accounted for in the original proposal where tender process has not been initiated; and Category D pertains to all new works proposed and yet to be proposed in i.e works which are in the pipeline under PMGSY. 6. It is submitted that in terms of the communication dated 06.06.2018, the respondent authorities made changes to the subsequent agreements. But in the agreement which was executed with the petitioner, there were no changes in terms of the advisory dated 06.06.2018. It is submitted that in so far as the agreement executed by and between the petitioner and the respondent, it is submitted that the agreement very categorically provides that the rates quoted by the petitioner should be exclusive of the....
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....etc. Therefore, deficiency in the part of the contractor to provide specifications at the time of his submission of his bids cannot be given undue benefit. Under such circumstances, the claim of the petitioner is contrary to the provisions of the agreement as well as the works executed and therefore the claims made are not genuine and bona fide. Therefore, the writ petition should be dismissed 8. The learned counsel for the parties have been heard. Pleadings available on record have been carefully perused. The relevant provisions of the statute referred have also been carefully perused. 9. The dispute raised in the present proceeding is whether in addition to the bills paid by the respondent authority in respect of the running bills raised by the petitioner, the GST component is also required to be paid by the respondent. It is noticed that on one hand the counsel for the petitioner has urged the proposition that the GST is to be paid under the reverse charge mechanism and as a consequence thereof, the entity which had last received the benefits, namely, the PWD department is required to pay the GST and to that extent the amount is required to be released and deposited to the....
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....d amount of taxes, if any and similarly, recovery is to be made from the contractor if the taxes have decreased. 3. On request of various States, seeking clarifications of GST and issuance of guidelines for future references, this office in consultation with Integrated Finance Division (IFD) of Ministry of Rural Development (MoRD) has worked out comprehensive guidelines and categorized all the projects under PMGSY into four different categories of A, B, C and D to enable the States to calculate additional tax burden. 4. The adoption and the consequent implication of GST under PMGSY will be on the following categories of works - i. Works sanctioned, prior to 01.07.2017, under different phases of PMGSY and which are ongoing i.e. subsisting contracts( including the delayed projects, beyond the original intended completion date) under various stages of physical and financial progress -(Category A) ii. Works sanctioned, after 01.07.2017, under different phases of PMGSY wherein GST has not been accounted for in the original proposal/sanction and wherein Tenders have been completed-(Category B) iii. Works sanctioned after 01.07.2017, under diff....
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....le the information for each ongoing project, taking into consideration the GST input tax credit available for the project. The assessment of subsumed shall be submitted by the contractor along with copies of invoices and statement of input taxes duly certified by a Chartered Accountant. It is responsibility of the contractor to furnish correct details of the subsumed taxes. viii. Once the value of work sanction and GST taxes are arrived, the employer may enter into supplemental agreement with revised agreement value that will be original contracted value minus the value of subsumed tax arrived as above plus GST of 12%. i.e., the cost of the subsumed taxes factored in the original contract value is required to be deducted from the original contract price to arrive at the actual amount of "cost of the project". ix. The GST law allows the ITC (Input Tax Credit) under the existing Acts (VAT etc) to be carried forward under their Transitional Provisions. Therefore, Section 140 of the GST law in effect allow credit of all subsumed taxes paid by a taxable person on his inputs, including the Central Excise Duty embedded in the price of inputs. x. Thus, the suppli....
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..... D. Category D i. In cases of all new works to be proposed under PMGSY, the states shall prepare Schedule of Rate (SoR) after deducting the taxes subsumed under GST. ii. The Detailed Project Reports shall be prepared based on this revised SoR and the state may add 12% GST to cost of the work to arrive at the overall cost of the work. iii. In all such cases approval of SoR may be obtained from NRRDA as per existing practice. 6. Revision of Cost The states shall work out the impact of GST for all the works individually for all category of works indicated above and shall submit detailed proposals based on the same. Any cost excess that may be required shall be borne by MoRD and the state in the existing Fund sharing pattern of PMGSY as may be applicable to the state. 7. These instructions will not apply to cases were the proposals have been made with necessary GST component for which no revision of cost is required or permitted. 8. This has concurrence of IFD, MoRD vide diary dated 28.05.2018. Yours sincerely, (Shamithi Priya S.) Director (F&A)" 10. A careful perusal of the said comm....
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.... minus the value of subsumed tax arrived as above plus GST of 12%. i.e., the cost of the subsumed taxes factored in the original contract value is required to be deducted from the original contract price to arrive at the actual amount of "cost of the project". ix. The GST law allows the ITC (Input Tax Credit) under the existing Acts (VAT etc) to be carried forward under their Transitional Provisions. Therefore, Section 140 of the GST law in effect allow credit of all subsumed taxes paid by a taxable person on his inputs, including the Central Excise Duty embedded in the price of inputs. xi. The contractor while raising their bill and tax invoice post-GST, will now collect GST as indicated above from the employer and will remit the same to the respective Government. The entire GST of the supply will have to be finally borne by the employer. xii. The contractor will have to pay GST on the value of work, which he will pay to the respective Government, partly using the ITC that represents the taxes that he has already paid through the inputs, and partly using cash collected from the procuring entity concerned. xiii. Through this arrangement, the supp....