Chhattisgarh High Court Directs Additional GST Refund on Work Contracts

The case of Surana and Company vs. Union of India reached the Chhattisgarh High Court related to the non-refund of a 6% differential GST obligation carried via contractors for works contracts. The court rendered the refund of the excess tax filed in the said duration.

The applicability of notification No.11/2017-Central Tax (Rate), amended by notification No.03/2022-Central Tax (Rate) is challenged by the applicant, which defined a GST rate of 18% for works contract services. They asked for the exemption for contracts executed before 18.07.2022 and asked for a refund of the 6% additional GST paid. State Authorities’ grievance emerges as of dormancy in granting the refund despite contracts being signed before the implementation of the revised rate.

The applicant claimed that the retrospective application of the revised GST rate was unfair and breached fundamental rights. They emphasized the discrepancies in the acceptance of work beneath the pre-amended contracts with the amended GST rate, stressing the lack of a refund process.

The respondents represented via counsel counter the applicants, claims, quoting the contractual clauses and previous circulars. From the contract terms, they argued that the contractors were biased and considered their rates inclusive of all taxes along with fluctuating rates. They contend against the applicability of the former orders of the court stating the differences in the cases.

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Post-hearing both parties, the court referred to precedents, along with M/s D.A. Enterprises vs. State of Chhattisgarh, and highlighted the arbitrary nature of the respondents’ actions. It reported the differences in reimbursing tax obligations across government departments and asked the applicants to provide fresh claims for scrutiny and reimbursement within 4 months.

The Chhattisgarh High Court directive in Surana and Company vs. Union of India represents a judicial stance against the arbitrary application of tax laws. By executing a refund in the said timeframe, the court maintains principles of fairness and equity in contractual dealings, underscoring the importance of protecting contractors’ rights in the face of tax revisions.