Vishal Verma S/O Sh. Sham Sunder Verma vs Union Of India Through It Secretary on 8 April, 2025

Judgment Summary: Vishal Verma S/O Sh. Sham Sunder Verma vs Union Of India Through It Secretary on 8 April, 2025

1. Outcome

The High Court dismissed the review petition, finding no error apparent on the face of the record or any other sufficient reason to recall its earlier judgment dated 3rd November, 2023.

2. Core Issue

The core issue before the Court in this review petition was whether there were grounds to review the earlier judgment, which had dismissed the petitioner's challenge to the recovery of differential GST. The recovery arose from a reduction in the GST rate on Works Contract Services (from 18% to 12%) after the last date for submission of tenders but before formal notification and work allotment.

3. Key Facts

• Petitioner: Vishal Verma, Proprietor of M/s Kiran Constructions.
• Initial GST Rate: Vide SRO-GST-11 dated 8th July, 2017, construction services under Heading 9954 were taxed at 18%.
• GST Council Recommendation: In its 20th meeting on 5th August, 2017, the GST Council recommended reducing GST on Works Contract Services from 18% to 12%.
• Tender Submission: The petitioner submitted tenders for works. The last due date for receipt of tenders was 1st August, 2017. At this time, the prevailing GST rate was 18%. The petitioner claimed to have submitted bids considering the GST Council's recommendation (i.e., 12%).
• Formal Rate Reduction: A formal notification, SRO-GST-06 (Rate), notifying the reduction of GST rates to 12% was issued on 21st September, 2017.
• Work Allotment: The petitioner's bids were accepted, and work was allotted after 21st September, 2017.
• Demand for Differential Tax: Respondent No.6 issued letters dated 6th April, 2021, calling upon the petitioner and other contractors to deposit the differential amount of tax (difference between 18% and 12%).
• Contract Condition: Special Condition 49 of the tender document stipulated that quoted rates are inclusive of all taxes prevailing on the last due date for tenders. It also provided for reimbursement of tax increases and recovery of tax decreases from the contractor.
• Prior Judgments:
  • WP(C) No.2183/2019 (M/s Pardeep Electricals and Builders Private Limited): Decided on 23rd December, 2020, found recovery notices violated natural justice but did not dispute the liability to pay tax, only the quantum.
  • WP(C) No.170/2021 (M/s Pardeep Electricals and Builders Private Limited): Decided on 3rd November, 2023, rejected the plea that bids considered the 12% GST rate based on the GST Council recommendation.
  • The petitioner's original writ petition, WP(C) No.932/2021, was dismissed on 3rd November, 2023, in light of the judgment in WP(C) No.170/2021. This is the judgment sought to be reviewed.

4. Arguments (Taxpayer vs Revenue)

Taxpayer (Vishal Verma/M/s Kiran Constructions):
* Post-Reduction Allotment: The work allotment orders were issued after 21st September, 2017 (when the GST rate stood reduced to 12%), therefore the reduced rate should apply.
* Condition 49 invalid: Special Condition 49 of the tender document is contrary to the statutory provisions of the GST Act, particularly Section 13 (time of supply for services).
* SRO-GST-2(Rate) applicability: Argued that the contract was governed by SRO-GST-2(Rate) dated 22nd August, 2017, which already notified 12% GST for composite supply of works contracts (specifically supplied to Government for certain types of works). Therefore, bids were made considering 12%, and there was no reduction from 18% to 12% requiring differential payment.

Revenue (Union of India):
* Res Judicata/Precedents: All issues raised by the review petitioner have already been conclusively decided by the High Court in previous judgments (WP(C) No.2183/2019 and WP(C) No.170/2021), which also covered similarly situated contractors including the petitioner.
* No Error Apparent: There is no error apparent on the face of the record, nor has any new fact or law been brought to the notice of the Court that would justify exercising review jurisdiction.
* Re-litigation: The review petition is an attempt to re-challenge a concluded judgment on the same old grounds.

5. Court’s Reasoning

The High Court dismissed the review petition for the following reasons:

• No Grounds for Review: The Court found no error apparent on the face of the record, no discovery of new facts, and no other sufficient reason to recall its well-considered judgment of 3rd November, 2023.
• Binding Nature of Special Condition 49: Special Condition 49 of the contract explicitly states that tendered rates include taxes prevailing on the last due date for tenders. It clearly provides for reciprocal liability: reimbursement for tax increases and refund/deduction for tax decreases. The petitioner, as a contracting party, is bound by this condition, and its validity was not challenged at any point previously.
• Effect of GST Council Recommendations: The GST Council's recommendation to reduce rates (on 5th August, 2017) was merely a recommendation and did not have statutory force. New rates became legally effective only upon formal notification (21st September, 2017). On the last date of bid submission (1st August, 2017), the prevailing GST rate was 18%. This principle is fundamental under Article 265 of the Constitution (no tax without authority of law) and was previously dealt with.
• Sections 13 & 14 CGST Act: The arguments based on Sections 13 and 14 of the CGST Act regarding the time of supply and change in tax rates were deemed not to advance the petitioner's case, especially in light of the express terms of Special Condition 49 in the contract.
• Interpretation of SRO-GST-2(Rate) dated 22nd August, 2017:
  • SRO-GST-11 dated 8th July, 2017, imposed 18% GST on composite supply of works contract (item No. 3(ii)).
  • SRO-GST-2(Rate) dated 22nd August, 2017, only brought changes for specific types of composite supply of works contracts (e.g., those for historical monuments, canals, pipelines supplied to government), amending item No. 3(i) of SRO-GST-11.
  • Crucially, SRO-GST-2(Rate) did not alter the 18% GST rate applicable to the general composite supply of works contract mentioned at item No. 3(ii) of SRO-GST-11.
  • Therefore, the prevailing rate for the petitioner's works on the last date of bid submission was 18%, which was subsequently reduced to 12% by the notification dated 21st September, 2017.
• The Court noted that the argument regarding SRO-GST-2(Rate) was raised for the first time in the review petition and was not specifically pleaded in the original writ petition.

6. Statutory References

• SRO-GST-11 dated 8th July, 2017 (Jammu & Kashmir Government notification on GST rates)
• SRO-GST-06 (Rate) dated 21st September, 2017 (Jammu & Kashmir Government notification on reduced GST rates)
• SRO-GST-02 (Rate) dated 22nd August, 2017 (Jammu & Kashmir Government notification)
• Central Goods and Services Tax Act, 2017 (CGST Act, 2017)
  • Section 2, Clause 119 (definition of composite supply of works contract)
  • Section 13 (Time of supply of services)
  • Section 14 (Change in rate of tax in respect of supply of goods or services)
• Article 265 of the Constitution of India (no tax save by authority of law)

7. Precedents Cited

• Vishal Verma v. Union of India and others, WP(C) No.932/2021 (Judgment dated 3rd November, 2023) - The judgment under review.
• M/s Pardeep Electricals and Builders Private Limited v. Union of India and others, WP(C) No.2183/2019 (Judgment dated 23rd December, 2020).
• M/s Pardeep Electricals and Builders Private Limited v. Union of India and others, WP(C) No.170/2021 (Judgment dated 3rd November, 2023).