GST refund directed to be processed as State authorities were held bound by Central Government circulars governing pre-GST contracts

Case Reference

M/s Alok Buildtech Pvt. Ltd. v. State of Chhattisgarh & Ors.
High Court of Chhattisgarh
Writ Petition (Civil) No. 5582 of 2024
Category of Dispute: Refund of GST – Works Contract (Pre-GST Contracts)
Date of Judgment: 16 December 2024

Facts

The petitioner, a Class-A contractor, was awarded a public works contract by the State authorities at pre-GST rates. During execution, GST was collected from the petitioner notwithstanding the contractual pricing framework. The Central Government had issued circulars clarifying that where GST was paid in respect of contracts awarded prior to the introduction of GST, the amount so paid was refundable upon submission of requisite proof. Despite repeated representations and production of relevant documents, the State authorities failed to process or grant the GST refund, leading to the present writ petition alleging administrative inaction and violation of binding policy directions (paras 1–2).

Questions Involved

Whether the State authorities could withhold or indefinitely delay refund of GST collected from a contractor executing pre-GST rate contracts, despite clear Central Government circulars providing for refund upon verification of GST payment (paras 2–3).

Observations

The Court noted that the grievance of the petitioner was confined to administrative inaction, not adjudication on merits of tax liability. It was observed that the Central Government had already laid down a refund mechanism through circulars dated 06.06.2018 and 28.01.2020, requiring the authorities to verify factual compliance and process refund claims accordingly. The State’s submission that verification was required was accepted only to the extent that such verification could not be used as a pretext for prolonged inaction. The Court further took cognisance of the petitioner’s contention that similarly placed contractors had already been granted refunds, reinforcing the obligation of parity and consistency in State action (paras 3–4).

Judgment

The writ petition was disposed of with a mandatory direction to the State authorities to immediately process the petitioner’s GST refund claim, after due verification of facts and eligibility strictly in terms of the applicable Central Government circulars. The authorities were directed to pass an appropriate reasoned decision within an outer limit of 90 days from receipt of the order. The Court clarified that the entitlement determination must remain aligned with prior Central Government orders and established administrative practice (paras 4–6).

Relevant Legal Framework

• Section 54, Central Goods and Services Tax Act, 2017

• Government of India Circular dated 06.06.2018

• Government of India Order dated 28.01.2020

• Administrative law principles governing legitimate expectation and non-arbitrariness under Article 14 of the Constitution of India

Classification of the Case under GST Act, 2017

Refund – GST paid on pre-GST rate public works contracts

Between Fine Lines (Trade & Industry Takeaway)

Contractors executing government contracts awarded at pre-GST rates are legally entitled to refund of GST collected during execution, provided proof of payment is furnished. State authorities cannot defer such refunds indefinitely under the guise of verification when Central Government policy directions are clear and uniformly applied. This judgment reinforces administrative accountability and offers a practical remedy against systemic delays in GST refunds arising from legacy contracts.

Cases Referred – Summary Table

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