GST reimbursement on Works Contract prior to GST Law –– The petitioner challenged order dated 27.08.2020, whereby the respondent has refused to accept the representation for refund of the additional tax burden, on the ground that the terms of the contract at the time of the execution of the work, did not provide for any such conditions of reimbursement. Water Resources Department of the Government of Chhattisgarh itself now vide order dated 30.09.2022 has amended the terms and conditions of the contract, which says the Department has taken a decision to ensure that the Additional Tax burden that has suffered by a Contractor in the event of a new tax that is imposed, the additional burden shall be reimbursed to the contract, subject to the Contractor furnishing the details of the difference of the tax liability and the additional tax that was required to be paid by the Contractor. The court observed that the action on the part of the respondents in rejecting the claim would be hit by Article 14 of the constitution of India for the reason that in the event of a Contractor having contract with the various Department of the Government, he gets the reimbursement of the additional tax liability from all other Departments except for one, thus it would be arbitrary and discriminatory. It would have been more reasonable and fair on the part of the State Government, if they would have issued one common Order for all the Department instead of passing orders Department wise taking into consideration the fact that the issue is of Policy matter rather than an individual dispute of a Contractor.

Held that:- The Hon’ble High Court set aside the order and directed the petitioner to make a fresh claim showing the difference of the tax liability that was incurred at the time of the submission of the bids and the excess tax paid by him in the light of the introduction of the GST. Upon such claim being made, the respondents shall forthwith process the same and the petitioner be suitably reimbursed after due scrutiny, within an outer limit of three months.