Ojas Construction Vs State of Madhya Pradesh And Others (Madhya Pradesh High Court)
The petitioner, a contractor engaged for construction of a dam and canal under the Dharampura Jalashay Yojna, filed a writ petition seeking reimbursement of the additional 6% Goods and Services Tax (GST) paid due to an increase in the GST rate on works contract services. The agreement was executed on 17 August 2022, when the applicable GST rate was 12%. However, the Central Government issued a notification dated 18 July 2022 enhancing the rate from 12% to 18%, and the petitioner subsequently sought reimbursement from the authorities through written representations dated 08 April 2025 and 29 September 2025. The petitioner argued that the additional GST burden should be reimbursed on grounds of parity with similarly situated contractors and requested a direction compelling the authorities to consider and grant the refund.
The Court examined Clause 25 of the agreement, which governs tax liabilities. Clause 25.1 states that the contractor’s quoted rates are deemed inclusive of GST and all other levies. Clause 25.2 makes the contractor liable for increases in taxes relating to works, services, labour, materials, and equipment, though GST is carved out. Clause 25.3 specifically provides that if the GST rate on works contract services is reduced during the contract period, the difference will be recovered from the contractor; if the GST rate increases, the increased amount “will be paid to the agency.” Clause 25.4 further states that changes in taxes due to legislative amendments or any other reason shall not be payable to the contractor.
