Case Law Details
Tapan Debnath Vs State of West Bengal (Calcutta High Court)
Introduction: In the case of Tapan Debnath Vs State of West Bengal, the Calcutta High Court has issued directions to the West Bengal government regarding the additional tax liability resulting from the implementation of the Goods and Services Tax (GST). The key issue addressed was the impact of GST on ongoing government contracts that were sanctioned both before and after the GST regime.
Analysis: The writ petition aimed at getting relief in terms of directing the concerned authorities to assume the added tax responsibility for ongoing government contracts. This included those contracts awarded before the GST era and those post its implementation where the Schedule of Rates (SOR) did not include the new GST guidelines in the Bill of Quantities (BOQ) during bid invitations. The petitioner further sought measures to counterbalance the unforeseen tax implications post-GST for contracts granted before its inception, and an update to the state’s SOR, replacing the now redundant West Bengal VAT with the new GST rules.
The court, after evaluating the arguments, granted the petitioner the right to submit a detailed representation to the Additional Chief Secretary of the Finance Department, Government of West Bengal. The court’s directive further elucidates that upon receiving the representation, the said Secretary is expected to make a conclusive decision, post consultations with related departments, within a four-month window. This decision-making process should also extend the petitioner an opportunity for a hearing. The court has also provided a protective clause, wherein no adversarial action will be taken against the petitioner until a final decision is reached. The entire decision-making process, as directed by the court, should be grounded in law and well-reasoned, taking into account various judgments from different High Courts relevant to the case.
Conclusion: The Calcutta High Court’s ruling in this case highlights the judicial system’s adaptive response to the complexities brought about by fiscal reforms like GST. It signifies the judiciary’s role in ensuring that such transitions are smooth, especially for stakeholders like government contractors. The decision exemplifies the court’s balanced approach, safeguarding the interests of the petitioner while providing the government an opportunity to address the challenges presented by the new tax system.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Affidavit-of-service filed in court be kept with the record.
Heard learned Counsel appearing for the parties.
This writ petition has been filed for the relief by way of direction upon the respondents authority concerned 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 Bill of Quantities (BOQ) for inviting the bids. The petitioner has also prayed for relief of issuance of direction upon the respondents authority concerned to neutralize the impact of unforeseen additional tax burden on Government contracts since the introduction of GST w.e.f. 1st July, 2017 for ongoing contract awarded before the said date and to update the State SOR incorporating applicable GST in lieu of inapplicable West Bengal VAT henceforth.
Considering the submissions of the parties this writ petition is disposed of by giving liberty to the petitioner to file appropriate representation in the aforesaid regard as referred in preceding paragraph of this order, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representation the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representation after consulting with all other relevant departments concerned.
Needless to mention that such representation shall be considered and final decision will be taken up by the Additional Secretary, after giving 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. In case of default in making representation within the time stipulated herein this order will not have any force.
It is also recorded that the Additional Chief Secretary, while taking decision on the representation to be filed by the petitioner shall act in accordance with law and pass a reasoned and speaking order on merit and after considering all the judgements of different High Courts upon which petitioners intend to rely.
With this observation and direction this writ petition being WPA 16290 of 2023 is disposed of.
