Case Law Details
Bikramjit Paul. Vs State of West Bengal & Ors. (Calcutta High Court)
Calcutta High Court recently delivered a significant ruling related to the Goods and Services Tax (GST) tax liability for government contracts. This ruling addresses the concerns of taxpayers who were awarded government contracts before and after the GST regime came into effect.
Detailed Analysis:
The writ petition in question sought relief in the form of a directive to the relevant authorities to bear the additional tax liability arising from the execution of existing government contracts. These contracts had been awarded either in the pre-GST era or during the post-GST period without adjusting the Schedule of Rates (SOR) to incorporate the applicable GST while preparing Bill of Quantities (BOQ) for inviting bids.
The petitioner also requested a direction to neutralize the impact of unexpected additional tax burdens on government contracts since the GST’s introduction on July 1, 2017. This request aimed to address ongoing contracts awarded before the aforementioned date. Additionally, the petitioner urged authorities to update the State SOR to include applicable GST, replacing the previously inapplicable West Bengal Value Added Tax (VAT).
After considering the submissions of both parties, the Calcutta High Court disposed of the writ petition by granting the petitioner the liberty to file an appropriate representation regarding the tax liability concerns. This representation was to be submitted to the Additional Chief Secretary, Finance Department, Government of West Bengal, within four weeks from the date of the court’s decision.
Upon receiving the representation, the Additional Chief Secretary, Finance Department, was instructed to make a final decision within four months. During this period, consultations with all relevant departments were to take place.
The court emphasized that the representation should be duly considered, and the final decision would be made by the Additional Secretary, Finance Department, after affording the petitioner or their authorized representatives an opportunity to present their case. Until the Additional Chief Secretary reached a final decision, no coercive action was to be taken against the petitioner.
It was also made clear that failure to submit the representation within the stipulated timeframe would render the court’s order ineffective.
The court’s order underscored the importance of adherence to the law and required the Additional Chief Secretary to pass a well-reasoned order on merit. Furthermore, the court urged the consideration of judgments from various High Courts that the petitioners intended to rely on.
Conclusion:
The Calcutta High Court’s ruling on GST tax liability for government contracts addresses the complex issues surrounding taxation in the context of these contracts. By allowing the petitioner to submit a representation and emphasizing the importance of a reasoned decision, the court has provided a path forward for addressing unexpected tax liabilities in government contracts awarded before and after the GST regime.
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 21957of 2023 is disposed of.
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