GST reimbursement directed as withholding of GST impact on pre-GST contracts was held arbitrary, violating fairness and equality principles

Case Details

• Case Title: M/s Ashoka Buildcon Limited v. State of Jharkhand & Ors.

• Court: High Court of Jharkhand at Ranchi

• Petition No.: W.P.(T) No. 851 of 2025

• Date of Judgment: 06.05.2025

• Category of Dispute: Refund / GST Impact on Pre-GST Contracts

• Relevant Sections: Section 7 & 9 of CGST Act (levy on supply), Section 15 (value of supply), Section 16 & 54 (ITC & Refund), Rule 89 of CGST Rules

Facts (Para 2–3)

The petitioner, M/s Ashoka Buildcon Limited, had been awarded contracts for Ranchi and Medininagar projects under the Integrated Power Development Scheme (IPDS) before GST came into force on 01.07.2017. After GST introduction, additional liability of ₹19.86 crore arose, which the petitioner paid. However, Jharkhand Bijli Vitran Nigam Limited (JBVNL) withheld reimbursement of this GST impact from bills post November 2017, despite Rural Electrification Corporation (REC) guidelines mandating such payments and other contractors receiving similar benefit. The petitioner sought writ relief against this arbitrary action.

Questions Before Court (Para 2, 3)

1. Whether JBVNL was justified in withholding reimbursement of GST impact on contracts awarded pre-GST but executed post-GST?

2. Whether denial of reimbursement violated equality under Article 14 and contractual fairness principles?

3. Whether the precedent in Sri Gopikrishna Infrastructure Pvt. Ltd. v. State of Jharkhand applies to the petitioner?

Observations (Para 4–8)

The Court relied extensively on its earlier Division Bench ruling in Sri Gopikrishna Infrastructure Pvt. Ltd. (W.P.(T) No. 6712 of 2023, decided 09.04.2024), which held:

• Contractors whose contracts were awarded pre-GST but executed during GST regime are entitled to reimbursement of GST on both direct and indirect transactions (para 30–31).

• Denial of reimbursement violates Article 14 and principles of equity, justice, and fair play, as State and its instrumentalities must maintain fairness even in contractual dealings (para 30).

• JBVNL’s contention that amendment of Clause 10.7 of GCC applied only prospectively was rejected, as the nature of work and obligations remained identical (para 5).

It was noted that the Supreme Court is seized of the matter in SLP No. 11658 of 2024, where 50% deposit has been directed, but until reversed, the High Court judgment governs.

Judgment (Para 9)

The High Court held that:

• The case of Ashoka Buildcon is squarely covered by Sri Gopikrishna Infrastructure Pvt. Ltd.

• Withholding of GST reimbursement by JBVNL was arbitrary and unsustainable.

• The writ petition was allowed with cost of ₹50,000 imposed on the respondents, payable to the petitioner.

Cases Referred (Summary Table)

Between Fine Lines

For contractors and industry, this ruling means GST reimbursement must be honored even in contracts awarded before GST but executed after its implementation. Any withholding by State agencies like JBVNL is arbitrary and courts will mandate payment along with costs and possible interest. It reinforces the principle that government contracts are bound by fairness and equality, not rigid technicalities of contract clauses.

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