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Holds Cannot Bring Pre-GST Services Under GST Regime
In a significant ruling that clarifies the of the Goods and Services Tax (GST) regime, the has held that of work completed before cannot alter the or bring such completed services within the GST framework. The decision, delivered by Justice Partha Sarathi Chatterjee on , underscores the over administrative formalities that occur after the introduction of GST.
The Court allowed a writ petition filed by Goutam Engineering Concern, a contractor enlisted with the , and directed the respondent to release ₹19,91,148 towards payment for technical personnel deployed for repair and maintenance of feeder lines. The order, accompanied by interest at 8% per annum from , provides much-needed clarity on the taxation of services that straddle the transition from the to GST.
The Dispute
The controversy arose from work carried out between and . Goutam Engineering Concern had deployed technical personnel for the repair and maintenance of feeder lines emanating from the Belmuri 33/11 KV Sub-Station during that period. The work was performed under a contract with WBSEDCL, but formal approval for the assignment was granted only on —well after GST came into force on .
Subsequently, the petitioner raised twelve monthly bills, each dated , but presented to WBSEDCL on . The respondent authority withheld payment on the ground that the petitioner had not complied with GST registration and related formalities. According to WBSEDCL, the absence of GST compliance prevented the release of the claimed amount.
Petitioner’s Submissions
, counsel for Goutam Engineering Concern, argued that the entire work entrusted to the petitioner had been completed in the year 2015, long before the GST Act came into effect. He contended that no liability to pay tax under the GST regime could be fastened upon the petitioner for services already executed. The denial of payment on the ground of non-compliance with GST formalities, he submitted, was arbitrary and unsustainable in law.
Respondent’s Stand
, representing WBSEDCL, countered that although the work was assigned for the period from to , the was granted only on , and the bills were submitted on without complying with GST provisions. According to the respondent, the petitioner had failed to furnish requisite GST details, and thus the amount could not be released.
Court’s Reasoning
Justice Partha Sarathi Chatterjee examined the sequence of events and the applicable legal framework. The Bench observed that the service in question stood rendered and completed much prior to the —. The subsequent order dated granting to work already executed could not, by itself, alter the date on which the service was actually supplied or bring such completed service within the GST regime.
The Court noted that the bill was raised on , but that fact could not determine the taxability of a service that had already been rendered and completed in 2015. Relying on , which deals with taxation of services during the transition from the earlier tax regime, along with a clarification issued by the concerning , the Bench held that the tax liability was governed by the , not GST.
“The post facto approval granted on 26th February, 2018 is of no consequence in determining the , as it merely regularised or approved the work already performed,” the Court stated. “Consequently, the liability arising from the service in question would be governed by the and not by the GST Act.”
Under Section 142
The judgment draws heavily on , which addresses the taxability of services that were partly or fully performed before the . The provision ensures that services completed before GST are not subjected to the new tax regime merely because of administrative delays in approval or billing. The ’s clarification further reinforced that and work orders remain outside the ambit of GST.
Direction to Release Payment
The High Court directed WBSEDCL to release ₹19,91,148 to the petitioner with interest at 8% per annum from until actual payment. The Court clarified that any tax payable under the pre-GST regime could be deducted, if otherwise applicable. It further directed that the payment be made within four weeks of communication of the order.
Importantly, the Bench acknowledged that the delay in payment could not be entirely attributed to the respondents, as there was a genuine dispute regarding the applicability of tax under the . Nonetheless, the liability to pay for the services rendered remained, subject to deduction of applicable service tax.
Implications for Taxpayers and Government Entities
This ruling has far-reaching implications for businesses and government departments that handle contracts spanning the transition from service tax to GST. It confirms that the date of actual service completion is the critical determinant for tax liability, not the date of administrative approval or billing. Post-facto approvals, often used to regularise work already performed, cannot be used to retrospectively bring pre-GST services within the GST net.
For taxpayers, the decision provides a shield against demands for GST on services that were completed before , even if invoicing or approval occurs later. For government entities, it serves as a reminder that withholding payments on the basis of GST non-compliance for pre-GST work may be legally untenable.
Conclusion
The ’s judgment in is a welcome clarification on the of the GST Act. By holding that and subsequent billing cannot alter the , the Court has reinforced the principle that . Legal professionals advising clients on transitional tax issues will find this ruling a valuable precedent in resisting unwarranted GST demands for pre-GST work.
