GST Payment for Defect Liability Period in Public Works Contract : Allahabad HC Directs Dept to Consider Claim of Contractor [Read Order]

In a recent ruling with regards to the Goods and Services Tax ( GST ) payment for the defect liability period in the public works contract, the Allahabad High Court has instructed the State authorities to examine and decide on the claim raised by the contractor.

The petitioner, M/S Rakesh Pratap Singh Chauhan had approached the Court, aggrieved by the State's alleged inaction in paying GST applicable during the Defect Liability Period of a construction contract.

Also read: Incomplete Challan for Job Work under GST Rule 45 Violates Rule 55: Allahabad HC Upholds Seizure and Penalty u/s 129

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The contract, initially awarded before the implementation of GST, later became subject to GST due to legislative changes during its execution. A Government Order dated November 9, 2017, provided for GST payments to contractors for such contracts.

While the GST payable during the main execution phase of the contract was reportedly paid by the authorities, the petitioner contended that GST was also liable on the Defect Liability Period, a post-completion phase during which the contractor remains accountable for the quality of work. The petitioner's claim, however, was allegedly not considered by the State.

Also read: Failure to Avail Opportunity is different from Failure to Grant Opportunity of Hearing: Kerala HC Dismisses Petition against CGST Order

The Division Bench comprising Justice Ashwani Kumar Mishra and Justice Donadi Ramesh Acknowledged the merit in the petitioner's grievance and directed the state department to examine the matter. The Court instructed that a reasoned decision regarding the release of GST for the Defect Liability Period be made in accordance with the applicable Government Order.

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The High Court ordered that this decision must be taken within two months of the petitioner submitting a certified copy of the judgment. If any amount is found payable upon such determination, it shall be released within four weeks thereafter.

Also read: Service of GST Notices and Orders via Common Portal Valid, rules Madras High Court

To Read the full text of the Order CLICK HERE

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