In WPA 21957 of 2023 -CAL HC- Calcutta High Court grants liberty to taxpayer to file representation against additional tax liability on government contracts; stays coercive action
Justice Md. Nizamuddin [19-09-2023]

Read Order: Bikramjit Paul v. The State of West Bengal & Ors

Chahat Varma

New Delhi, October 4, 2023: The Calcutta High Court has granted liberty to a taxpayer to file an appropriate representation before the Additional Chief Secretary, Finance Department, Government of West Bengal against the additional tax liability on government contracts. The Court has also stayed any coercive action against the petitioner until the Additional Chief Secretary takes a final decision on the representation.

The writ petition in question was filed to seek relief by directing the GST authority to bear the additional tax liability associated with existing government contracts. These contracts were either awarded before the implementation of the GST or afterward, but in both cases, the Schedule of Rates (SOR) had not been updated to include the applicable GST rates when preparing the Bill of Quantities (BOQ) for inviting bids. The petitioner also requested directions to mitigate the unforeseen tax burden on government contracts that arose due to the introduction of GST on July 1, 2017. This relief was sought for ongoing contracts awarded before the GST's effective date. Additionally, the petitioner sought the updating of the State SOR to incorporate the applicable GST rates, replacing the outdated West Bengal VAT.

The single-judge bench of Justice Md. Nizamuddin disposed of the writ petition, by giving liberty to the petitioner to file appropriate representation before the Additional Chief Secretary, Finance Department, Government of West Bengal. Once the representation is received, the bench instructed that the Additional Chief Secretary, Finance Department, should make a final decision, taking into account consultations with all other pertinent government departments.

Furthermore, the bench emphasized that while the final decision by the Additional Chief Secretary is pending, no coercive action should be initiated against the petitioner. However, it was also pointed out that if the petitioner fails to submit the representation within the specified timeframe, the court's order would not be enforceable.