GST is required to be made good to the contractor as it was only 5% of the VAT which was provided for in the contract.
Work contracts prior to GST—- The petitioner sought directions to the respondent to reimburse GST amount of Rs. 42,01,582/- along with interest. The respondent authority had invited bids pursuant to floating of tender and the petitioner was awarded the contract and the rates that were finalised as per the bid documents included sales tax component @ 5% but the tender and work orders were allotted to the petitioner on 07.12.2018 and 29.12.2018 which is after GST. The petitioner after having paid the applicable GST, has made representations on 01.08.2019 to the respondent to release the GST amount. The Finance Department of state government by its clarification dated 14.12.2020 has also opined that the tax difference ought to be calculated on each of the works and necessary steps to be taken to decide as to whether contract agreement needs to be changed. The court observed that the respondent is required to act in terms of the clarification made.
Held that:- The Hon’ble High Court held that the tax component is an independent component which the petitioner does not retain as a profit and is a statutory payment to be made. The respondent is required to honour the same in terms of the clarification and the consideration by the respondent to be made within a period of not later than twelve weeks.
GST is required to be made good to the contractor as it was only 5% of the VAT which was provided for in the contract.
Work contracts prior to GST—- The petitioner sought directions to the respondent to reimburse GST amount of Rs. 42,01,582/- along with interest. The respondent authority had invited bids pursuant to floating of tender and the petitioner was awarded the contract and the rates that were finalised as per the bid documents included sales tax component @ 5% but the tender and work orders were allotted to the petitioner on 07.12.2018 and 29.12.2018 which is after GST. The petitioner after having paid the applicable GST, has made representations on 01.08.2019 to the respondent to release the GST amount. The Finance Department of state government by its clarification dated 14.12.2020 has also opined that the tax difference ought to be calculated on each of the works and necessary steps to be taken to decide as to whether contract agreement needs to be changed. The court observed that the respondent is required to act in terms of the clarification made.
Held that:- The Hon’ble High Court held that the tax component is an independent component which the petitioner does not retain as a profit and is a statutory payment to be made. The respondent is required to honour the same in terms of the clarification and the consideration by the respondent to be made within a period of not later than twelve weeks.