Case Summary: Bimal Roy v. State of West Bengal & Ors., WPA 2459 of 2023 — Calcutta High Court (Jalpaiguri Bench)
Judgment dated 19 October 2023; Issue: GST on Government Works Contract; Sections 73, 74 CGST/WBGST Act; Category: Demand/Works Contract Tax Burden; Court: Hon’ble Justice Ajay Kumar Gupta
Factual Matrix (Paras 1–10)
The petitioner, a registered works contractor, executed several government works where the estimation/tendering originated in the pre-GST regime, though execution continued into the post-GST period (Paras 2–3). The Government issued payment certificates on 10.04.2018, 03.05.2018 and other dates without including GST, contrary to statutory requirements (Para 3). The petitioner voluntarily deposited GST of ₹45,61,502 (CGST + SGST) in Form DRC-03 on 18.02.2021 (Para 4).
Subsequently, the State GST authority triggered proceedings by issuing:
-
Notices under Rule 56(18) seeking documents (14.07.2023 and reminders)
-
DRC-01A under Section 74(5) dated 29.08.2023 alleging suppressed turnover vis-à-vis Form 26AS (Paras 6 & 9)
-
Summary SCN in DRC-01 dated 22.09.2023 alleging tax of ₹3,95,91,218, interest ₹1,97,48,528, penalty ₹3,95,91,218, aggregating ₹9,89,30,964, issued without any digital/manual signature, violating Rule 26(3) (Para 7)
The petitioner contended that GST is an indirect tax, hence the recipient (Government contractee) must bear GST on works contract under Notification No. 5050-F(Y) dated 16.08.2017, which clarified that ongoing/pre-GST approved works attract GST post-1 July 2017 (Para 8). The petitioner submitted representations to Government bodies seeking payment of GST and interest (Para 5).
The petitioner relied on several judgments including Bikramjit Paul, Subimal Kumar Majhi, Techno Electric, and Maa Vindhya Vasini Constructions to demonstrate that government entities cannot refuse GST liability for works already executed (Para 10).
State defended that under Section 73, the liability to collect and remit GST rests on the contractor, yet fairly submitted that similar orders had been passed earlier and could be followed (Para 11).
Questions/Issues for Determination
-
Whether a works contractor executing pre-GST awarded contracts in the post-GST era is entitled to have the additional GST liability borne by the Government contractee?
-
Whether the GST demand raised through unsigned DRC-01 violates Rule 26(3) of CGST/WBGST Rules?
-
Whether pending such determination, coercive recovery can continue?
Court’s Observations & Analysis (Paras 12–15)
The Court noted that the State Government departments failed to update the Schedule of Rates (SOR) after GST implementation, resulting in contractors being saddled with unforeseen additional tax burden (Para 12).
The Court acknowledged the petitioner’s grievance that government contractees must neutralise GST impact, consistent with Notification No. 5050-F(Y) dated 16.08.2017 (Para 8).
In light of prior judgments and the systemic issue, the Court held that the matter required decision by the State Finance Department, as several departments are involved in SOR revision, tax burden allocation, and payment procedures (Para 13).
The Court emphasised that the Additional Chief Secretary must render a reasoned, speaking order after hearing the petitioner and considering the case law relied upon (Para 15).
Final Verdict (Paras 13–16)
-
The petitioner is granted liberty to file a detailed representation before the Additional Chief Secretary, Finance Department within four weeks (Para 13).
-
The Additional Chief Secretary shall decide the representation within four months, after consulting all relevant departments and granting a personal hearing (Paras 13 & 14).
-
No coercive action shall be taken against the petitioner until such decision is rendered (Para 14).
-
If the petitioner fails to file the representation within the prescribed timeline, the protective direction will cease to operate (Para 14).
-
The writ petition was disposed of without costs (Para 16).
Summary of Cases Relied Upon — Tabular Form
| Case | Court | Ratio Decidendi | Relevance |
|---|---|---|---|
| Bikramjit Paul v. State of West Bengal, WPA 21957/2023 | Calcutta HC | Held that Govt contractees must address GST implications for pre-GST tenders executed post-1 July 2017 | Supports petitioner’s claim for GST reimbursement |
| Subimal Kumar Majhi v. State of West Bengal, WPA 20584/2018 | Calcutta HC | Directed Government to resolve contractors’ GST burden on ongoing contracts | Establishes administrative duty on State |
| Techno Electric & Engineering Co. Ltd. v. State of Jharkhand, 2023 (7) TMI 1292 | Jharkhand HC | Government must bear GST where contract terms pre-dated GST and price did not factor GST | Parallel reasoning favouring contractor |
| Maa Vindhya Vasini Constructions v. CEO, UPRRDA, Contempt Case | Allahabad HC | Non-payment of tax component by State despite orders held contemptuous | Shows judicial disapproval of State inaction |
Between the Fine Lines — Practical Takeaways for Industry
Contractors executing government works contracts—particularly those tendered prior to 1 July 2017 but performed afterwards—cannot be unilaterally burdened with GST where contractual value never contemplated such tax. State authorities must update the SOR, evaluate GST impact, and reimburse or compensate contractors. Where GST authorities initiate proceedings, courts are inclined to protect contractors until the Government resolves the fiscal liability. This judgment reinforces that tax authorities may not press coercive recovery when the core responsibility of updating contract valuation lies with the State.
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.”