Case Law Details
Sanjib Singha Roy Vs State of West Bengal & Ors. (Calcutta High Court)
Calcutta High Court stays GST proceeding against Government Contractor until Final Decision comes from Additional Chief Secretory, Govt. W.B
In a significant development, the Calcutta High Court at Jalpaiguri Circuit Bench, in its judgment dated 29.11.2023, stayed GST proceedings against government contractor Sanjib Singha Roy until a final decision is made by the Additional Chief Secretary of the Government of West Bengal.
Detailed Analysis: The writ petition (WPA 2513 of 2023) filed by Sanjib Singha Roy challenges a Notice Issued by the Bureau of Investigation (North Bengal) Alipurduar, West Bengal GST, regarding the additional tax liability for executing government contracts, both pre-GST and post-GST, without updating the Schedule of Rates (SOR) to include applicable GST. The petitioner seeks relief from the unforeseen tax burden on government contracts and urges the update of the State SOR to align with the new GST framework.
The Calcutta High Court, recognizing the complexity of the issue, directed the Additional Chief Secretary to pass a reasoned order after considering various judgments from different High Courts. Until a final decision is reached, no coercive action by GST authorities is permitted. The court emphasized the petitioner’s right to represent his case and instructed the Additional Chief Secretary to make a final decision within three months, considering all relevant legal aspects.
Conclusion: The court’s directive provides a crucial interim relief for Sanjib Singha Roy, preventing immediate coercive actions by GST authorities. The decision empowers the petitioner to present his case to the Additional Chief Secretary, Finance Department, Government of West Bengal, with an expectation of a fair and lawful resolution. The judgment also underscores the importance of updating government contracts to reflect GST obligations, ensuring clarity and fairness in tax liabilities for both parties involved.
This development highlights the ongoing challenges and legal intricacies arising from the implementation of GST, particularly concerning government contracts. It sets a precedent for similar cases and emphasizes the need for a comprehensive and legally sound approach in addressing GST-related issues in contractual agreements. The detailed analysis and court’s directives offer valuable insights into the legal landscape surrounding GST liabilities for government contractors in the state of West Bengal.
In conclusion, the Calcutta High Court’s decision marks a crucial step in clarifying the tax liabilities associated with government contracts in the context of GST, providing a framework for resolution and reinforcing the importance of legal adherence in matters of taxation and contractual obligations.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Affidavit-of-service filed in Court today, be kept with the record.
Heard learned advocates appearing for the parties.
This writ petition has been filed for a direction upon the State respondents to bear the additional tax liability for execution of subsisting government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing the Bill of Quantities (BOQ) at the time of inviting the bids. The petitioner has also prayed for issuance of a further direction upon the concerned authorities to neutralize the impact of unforeseen additional tax burden on government contracts owing to the introduction of GST, with effect from July 1, 2017, for ongoing contracts awarded before the said date and to update the State SOR by incorporating applicable GST in lieu of inapplicable West Bengal VAT.
The petitioner also challenges the show cause notice issued by the Assistant Commissioner, Bureau of Investigation (North Bengal), Alipurduar Zone, that is the respondent no.3, dated September 29, 2023 on account of short payment of tax. Such notice was issued under Section 73 of the CGST and WBGST Act, 2017, calling upon the petitioner to pay the tax liability with interest, for the period 2017-18 and 2018-19.
Mr. Agarwal, learned advocate for the State respondents submits that the contention of the petitioner that unless the government authorities incorporate the GST liability in the contracts, the GST liability could not be claimed from the petitioner, is not correct. The GST authorities are not bound by the contract between the petitioner and the Government. The authorities are empowered by law, to proceed against the taxpayer, for non-payment of tax. The show cause notice has been rightly issued.
The petitioner has relied on several decisions of the High Court, allowing similarly situated government contractors to approach the appropriate authority of the government for a decision as to whether the GST component would be incorporated in the Schedule of Rates post the GST regime, in case of those contracts which were executed pre-GST.
Considering the submissions of the parties and in view of the several decisions relied upon by the petitioner, this writ petition is disposed of by granting liberty to the petitioner to file an appropriate representation in this regard, before the Additional Chief Secretary, Finance Department, Government of West Bengal within three weeks from date. On receipt of such representation, the Additional Chief Secretary, Finance Department shall take a final decision within three months, in accordance with law.
Needless to mention, such representation shall be considered and a final decision will be taken by the Additional Secretary, after giving an opportunity of hearing to the petitioner or his authorized representatives. Till the final decision is taken by the Additional Chief Secretary, no coercive action shall be taken against the petitioner by the GST authorities. In case of default in filing the representation within the time stipulated herein, this order will not have any force.
It is also directed that the Additional Chief Secretary shall act in accordance with law and pass a reasoned order on merits and after considering all the judgments of different High Courts upon which petitioner intends to rely. The reasoned order shall be communicated. On the outcome of the hearing, the GST authorities shall proceed according to law.
With the above observations and directions, this writ petition is disposed of.
However, there shall be no order as to costs.
All the parties are directed to act on the basis of the server copy of this order.
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