Introduction: The case of “Sunshine Enterprise vs State of West Bengal” revolves around a writ petition filed in the Calcutta High Court, seeking directions for bearing the additional tax liability for executing Government contracts awarded before and after the GST regime. The petitioner urges the incorporation of applicable GST in Schedule of Rates (SOR) for ongoing and future contracts.
Analysis: The petitioner raises concerns about the tax burden on Government contracts due to the absence of updated SOR incorporating GST. The petitioner requests the Court to direct the authorities to consider and address this issue. The Calcutta High Court has granted the petitioner the liberty to file a representation before the Additional Chief Secretary, Finance Department, Government of West Bengal, within four weeks.
The Court instructs that the representation should outline the impact of unforeseen tax burdens on ongoing contracts awarded before the GST’s implementation. The Additional Chief Secretary is required to make a final decision within four months of receiving the representation, after consulting relevant departments and considering relevant judgments of different High Courts. Until a decision is made, no coercive action will be taken against the petitioner.
Conclusion: The direction of the Calcutta High Court underscores the importance of addressing tax implications arising from Government contracts in the context of GST implementation. The Court’s order enables the petitioner to formally present their concerns and allows the authorities to make a decision based on a comprehensive examination of the issue and relevant legal precedents. This case reflects the judiciary’s role in ensuring fairness and adherence to tax regulations in the context of government contracts.
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 judgments of different High Courts upon which petitioners intend to rely.
With this observation and direction this writ petition being WPA 16297 of 2023 is disposed of.