Disputed tax liability under GST for government contracts must be resolved in civil court rather than through writ petitions due to the nature of factual disputes and contract interpretation involved.

J U D G M E N T

Kauser Edappagath, J.

This writ appeal has been filed challenging the judgment of the learned Single Judge in WP(C) No.32206/2023 dated 3rd October, 2023.

2. The appellant is a Class - A Electrical Contractor registered with the Kerala Public Works Department. He was awarded the contract for the execution of the electrical works regarding the augmentation of the power system in Government Medical College, Kozhikode pursuant to the tender dated 28/5/2019 invited by the 1st respondent. An agreement for the execution of the said work was executed between the appellant and the 1st respondent on 13/6/2019 governing the terms and conditions, and the appellant carried out the said work. In the course of the periodical submission of the bills for the work done, the appellant was paid the total contract amount of `3,64,56,779/- as on 31/3/2023 which includes GST @2% deducted at source. The tender for the works was invited by the 1st respondent after the enactment of GST laws w.e.f. 1/07/2017. “Works contract” falls within the ambit of S.2(119) of the GST Act, 2017 and composite works contract executed for Government is taxable @12% as per Notification No.20/2017 up to 31/12/2021 and after that, the enhanced rate of 18% w.e.f 1/01/2022 as per Notification No.15/2021 CT(Rate) dated 18/11/2021. According to the appellant, apart from deducting 2% towards the GST component from the eligible contract amount, the 1st respondent did not pay any amount towards GST to him though he was discharging the tax liability @12%/18% by declaring the contract receipts in the returns filed under the GST Act. In these circumstances, the appellant has approached this Court to give a direction to the respondents to reimburse him the tax paid @12%/18% on the work he executed. The learned Single Judge dismissed the writ petition as per the impugned judgment holding that the appellant's remedy is to approach the civil court.

3. We have heard Sri.K.N.Sreekumaran, the learned counsel for the appellant and Dr.Thushara James, the learned Senior Government Pleader.

According to the appellant, though the total amount of estimate for the work should be arrived at exclusive of GST, and the payment has to be made to the contractor for the total value of the work at contract rate plus the applicable GST, the 1st respondent has only deducted GST @2% from the contract amount. He contends that he paid the tax due on the contract receipts @12%/18% out of his own pocket. But the 1st respondent took the stand that contract rates are based on 2016 DSR rates adopted for Government works and hence, tax at the applicable rate under the GST Act cannot be paid to the appellant. The question whether the appellant is entitled to be paid GST @12%/18% on the contract amount received or not is a disputed question of fact which cannot be decided in a writ petition filed under Article 226 of the Constitution of India. The determination of the said question includes the interpretation of the terms of the contract entered into between the appellant and the respondents. Such an exercise cannot be undertaken by the writ court. The remedy open to the appellant is to approach the civil court as rightly held by the learned Single Judge. We see no illegality or impropriety in the judgment impugned. Accordingly, the writ appeal is dismissed.

DR. A.K.JAYASANKARAN NAMBIAR JUDGE