The Single Bench of Justice Rajani Dubey of the High Court of Chhattisgarh directed the department to refund the excess Goods and Services Tax paid by the contractors at the rate of 18% on Works Contracts.
The petitioners contested against the imposition of an 18% GST rate on contracts executed before 18.07.2022 and sought a declaration that this notification prescribing the 18% GST rate be deemed inapplicable for contracts executed prior to the specified date, with a request for a refund of the additional 6% GST paid.
The petitioners argued that this retrospective application of the increased GST rate was unreasonable, illegal, arbitrary, and violated fundamental rights under the Constitution of India. They contended that their bids were based on the prevailing 12% GST rate, and the retrospective application of the higher rate without a refund mechanism was unjust.
In response, the respondents, including the Union of India and the State of Chhattisgarh, opposed the petitioners’ claims, citing contract clauses stating that contractor rates are inclusive of all taxes, including increased or decreased tax rates.
After hearing arguments from both sides, the Court directed the petitioners to make a fresh claim for reimbursement of the additional tax liability and instructed the respondents to process these claims within four months.
It was observed by the Single Bench of Chhattisgarh High Court that, “The documents submitted by the petitioners in the present writ petitions postulate that some of the departments of the State Government of Chhattisgarh have accepted such claim of the contractors where certain additional burden of money was incurred upon them after coming into force of the GST.”
The Court emphasized fairness and justice in addressing the grievances of the petitioners regarding the retrospective application of GST rates in works contracts.
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