Case: Siddartha Constructions v. Andhra Pradesh High Grade Steels Ltd. (Presently YSR Steel Corporation Ltd. and Others)
Court: High Court of Andhra Pradesh, Amaravati
Petition No.: W.P. No. 23603 of 2024
Category: GST – Rate of Tax / Contractual Reimbursement
Date of Judgment: 19 February 2025
Relevant Provisions: Section 9 of CGST/SGST Acts, Notification No. 11/2017–CT (Rate) dated 28.06.2017, Notification No. 20/2017–CT (Rate) dated 22.08.2017, and Notification No. 24/2017–CT (Rate) dated 21.09.2017.
Facts (Paras 1–3)
The petitioner, Siddartha Constructions, executed works contracts for Andhra Pradesh High Grade Steels Ltd. (later YSR Steel Corporation Ltd.) under an agreement dated 23 November 2020. Believing the company to be a “Government entity,” the petitioner charged GST @ 12% in terms of Notifications 11/2017, 20/2017 and 24/2017. Later, the GST authorities clarified that the concessional 12% rate applied only when supplies were made directly to Government departments and not to Government corporations. Consequently, the petitioner was required to discharge tax at the regular rate of 18%.
To resolve the dispute, the petitioner sought a ruling from the Authority for Advance Ruling (AAR), which confirmed GST liability @ 18% (9% CGST + 9% SGST). Following this, the petitioner paid the higher tax and sought reimbursement of the 6% differential from the respondent corporation under the terms of the contract, which provided for reimbursement of taxes paid.
Questions before the Court (Para 3–4)
Whether the respondent-corporation was contractually and legally bound to reimburse the petitioner the additional 6% GST paid to the Government after the AAR ruling.
Court’s Observations (Paras 4–5)
The Court noted that despite service, the respondent corporation did not appear. It found no dispute that the petitioner was indeed liable for GST @ 18% on the contract value. Importantly, the corporation had reimbursed only 12% GST, while the contract terms indicated that full tax actually paid was to be reimbursed. As the respondent had not denied this contractual clause, the Court held that the corporation must reimburse the balance 6% GST, along with any interest charged by tax authorities for delayed payment.
Judgment (Paras 6–7)
The High Court directed YSR Steel Corporation Ltd. (respondent no. 1) to reimburse the petitioner the differential 6% GST paid under the works contract within three months from receipt of the order. If any interest had been recovered from the petitioner by GST authorities, that too was to be reimbursed.
No order as to costs. Pending miscellaneous petitions were closed.
Summary of Referred Precedents
| Sr. No. | Case Name | Issue | Verdict / Relevance |
|---|---|---|---|
| 1 | — | No external case cited | — |
Between Fine Lines (Trade Takeaway)
For contractors executing works for Government-owned corporations, concessional GST rates applicable to “Government entities” may not apply. However, where the contract provides for reimbursement of taxes actually paid, the contractor can claim recovery of differential tax from the contracting corporation. The judgment emphasizes the binding nature of reimbursement clauses and underlines the importance of clear drafting of GST clauses in public contracts.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
