Case Law Details
Dipak Sarkar Vs State of West Bengal And Ors (Calcutta High Court)
The recent judgment by the Calcutta High Court in the case of Dipak Sarkar v. The State of West Bengal and Others [WPA/2127/2023 dated September 15, 2023] has significant implications for businesses regarding their Goods and Services Tax (GST) liability. The court’s decision revolves around whether the assessee is obligated to pay GST on payments received after the implementation of the GST regime for work orders that were initiated before the GST regime came into effect.
Hon’ble Calcutta High Court, dismissed the writ petition and held that the assessee is liable to pay the GST on payment received after implementation of the GST regime for the work orders given prior to the implementation of the GST regime.
Facts:
Dipak Sarkar (“the Petitioner”) is engaged in the business of providing contractual services to the State Government for executing the works contract.
The Petitioner, aggrieved by the appellate order (“Impugned Order”) passed by the Revenue Department (“the Respondent”) under the GST Act, contended that Notification No. 5050 – F(Y) dated August 16, 2017 under which Government of West Bengal stated the guidelines regarding issues pertaining to treatment of works contracts entered with the government of West Bengal in the Pre-GST and Post-GST regime, wherein the Notification does not deal with payments made in the post-GST regime in respect to the works contracts or outgoing projects that have been approved before July 1, 2017.
The Respondent contended that the Contract was executed on August 20, 2018 between the Petitioner and the State Government, and the completion certificate of the work done was issued on July 8, 2023, therefore, no question arises for the applicability of the Pre-GST regime provisions as the Contract was executed and the completion certificate of the work done was issued, after the implementation of the GST.
The Respondent, further contended that numerous opportunities were granted to the Petitioner, but the Petitioner failed to prove the non-applicability of GST amounting to Rs. 1,90,67,822/- received on the works contract granted and executed after the implementation of the GST Act. Thereby, due to willful misstatement provided by the Petitioner, proceedings under Section 74 of the Central Goods Services Tax Act, 2017 (“the CGST Act”) were initiated against the Petitioner.
Issue:
Whether the Petitioner is liable to pay GST on payment received after implementation of the GST Act for the Works contract entered before implementation of the GST Act?
Held:
The Hon’ble Calcutta High Court in WPA/2127/2023, held as under:
- Opined that, the Impugned Order is reasoned and has been passed after taking into consideration all the points raised by the Petitioner. Thus, the Impugned Order is valid and devoid of any error of law.
- Held that, all the payments regarding the works contract are executed post-GST, making the Petitioner obligated to pay GST on the payment received and tax had to be deposited after filing of the required forms. Hence, the writ petition is dismissed.
Conclusion:
The Calcutta High Court dismissed the writ petition, affirming the GST liability of the petitioner for payments received after the implementation of the GST regime for work orders that were initiated before the GST regime came into effect. The court found that the impugned order was well-reasoned and passed after considering all points raised by the petitioner. It noted that all payments related to the works contract were made during the post-GST period, thus making the petitioner liable to pay GST on the received payments, with the taxes being required to be deposited after proper form filings.
In essence, this judgment highlights the importance of understanding the GST implications on payments received after the GST regime’s implementation for contracts initiated prior to the GST era. It underscores the need for businesses to adhere to the tax regulations and file the necessary forms to ensure compliance and avoid any potential liabilities.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The writ petition is directed against an appellate order passed under Section 107 of the West Bengal Goods and Service Tax Act, 2017.
Briefly, the petitioner is a contractor executing works for the State Government. The grievance of the petitioner is that the Notification dated 16th August, 2017 does not deal with payments made in the post GST regime in respect of contracts or outgoing projects where estimates had been approved before 1st July, 2017, i.e., those work orders which were given prior to GST regime but have been executed after GST regime. The petitioner also complains of the violation of the principles of natural justice and submits that no opportunity of hearing was given to the petitioner.
On these grounds, the petitioner assails the impugned order.
On behalf of the respondent authorities, it is submitted that it would be evident from the impugned order that the subject agreement was executed on 20th August, 2018 by the Superintending Engineer P.W.D. North Bengal Construction Circle No.1, Bhola Ashram, Cooch Behar and the completion certificate was also issued on 8th July, 2023. As such, there is no question of the pre GST regime being applicable and the contract has been granted and executed after the introduction of the Act. In such circumstances, there is no ambiguity nor clarification necessary. It is also submitted on behalf of the authorities that the petitioner had been given an adequate opportunity and had failed to support the claim of non-applicability of the GST amount of Rs.1,90,67,822/- received on account of works contract granted and executed after the post GST regime. Thus, there has been willful mis-statement by the petitioners and appropriate proceedings had been initiated under Section 74 of the Act which have culminated in the impugned order being passed.
The impugned order is well reasoned and categorically records that the petitioner has received the entire payment against execution of work contracts in the post GST regime. Hence, the petitioner was obliged to pay GST on such payment and the same ought to have been made after filing the proper form. The plea of the appellant that the tax has not been paid by the Department, is also not tenable in law and non-payment of GST by the petitioner is in contravention of the provision of the Act. In any event, all these aspects have been considered in the impugned order.
The impugned order contains reasons and has been passed after affording the petitioner an opportunity. All the points of the petitioner have been duly dealt with and considered in the impugned order. There are no other grounds urged warranting any interference with the impugned order. There is no illegality nor perversity nor error of law in the impugned order.
In such circumstances, WPA/2127/2023 stands dismissed.
However, there shall be no order as to costs.
****
(Author can be reached at info@a2ztaxcorp.com)
Author Bio
