Kerala High Court
M/S. Raji Mathew & Co vs The Commissioner Of State Gst on 6 November, 2024
Author: P Gopinath
Bench: P Gopinath
2024:KER:82465
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
WEDNESDAY, THE 6TH DAY OF NOVEMBER 2024 / 15TH KARTHIKA,
1946
WP(C) NO. 36620 OF 2024
PETITIONER:
M/S. RAJI MATHEW & CO.,
PAMPLANIYIL,BHARANANGANAM P.O,
KOTTAYAM -686 578, REPRESENTED BY ITS MANAGING
PARTNER, RAJI MATHEW, PIN - 686 578
BY ADVS.
K.KRISHNA
ACHYUTH MENON
NIRMAL KRISHNAN
RESPONDENTS:
1 COMMISSIONER OF STATE GST,
STATE GST DEPARTMENT, TAX TOWERS, KARAMANA,
KILLIPPALAM, THIRUVANANTHAPURAM, PIN - 695002
2 THE PROJECT DIRECTOR,
PROJECT MANAGEMENT UNIT,KERALA ROAD FUND
BOARD,THIRUVANANTHAPURAM, PIN - 695001
3 THE EXECUTIVE ENGINEER,
PROJECT MANAGEMENT UNIT,KERALA ROAD FUND
BOARD,KOLLAM DIVISION,KOLLAM, PIN - 691001
4 THE ADDITIONAL CHIEF EXECUTIVE OFFICER
KERALA INFRASTRUCTURE INVESTMENT FUND BOARD,2ND
FLOOR, FELICITY SQUARE,KODER LN,PALAYAM,
THIRUVANANTHAPURAM, PIN - 695001
5 THE ADDITIONAL CHIEF SECRETARY (FINANCE)
FINANCE (INDUSTRIES & PUBLIC WORKS-B)
DEPARTMENT,
W.P(C) Nos.36620 & 36589 of 2024 :2: 2024:KER:82465
GOVERNMENT OF KERALA,THIRUVANANTHAPURAM,
PIN - 695001
SRI. E C BINEESH (SC), SMT. JASMIN M M (GP)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 06.11.2024, ALONG WITH WP(C).36589/2024,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P(C) Nos.36620 & 36589 of 2024 :3: 2024:KER:82465
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
WEDNESDAY, THE 6TH DAY OF NOVEMBER 2024 / 15TH KARTHIKA,
1946
WP(C) NO. 36589 OF 2024
PETITIONER:
M/S. RAJI MATHEW & CO.,
PAMPLANIYIL,BHARANANGANAM P.O,KOTTAYAM,
REPRESENTED BY ITS MANAGING PARTNER, RAJI
MATHEW, PIN - 686578
BY ADVS.
K.KRISHNA
ACHYUTH MENON
NIRMAL KRISHNAN
RESPONDENTS:
1 THE COMMISSIONER OF STATE GST,
STATE GST DEPARTMENT, TAX TOWERS, KARAMANA,
KILLIPPALAM, THIRUVANANTHAPURAM,
PIN - 695002
2 THE PROJECT DIRECTOR,
PROJECT MANAGEMENT UNIT,KERALA ROAD FUND
BOARD,THIRUVANANTHAPURAM, PIN - 695001
3 THE EXECUTIVE ENGINEER,
PROJECT MANAGEMENT UNIT,KERALA ROAD FUND
BOARD,KOLLAM DIVISION,KOLLAM, PIN - 691001
4 THE ADDITIONAL CHIEF EXECUTIVE OFFICER,
KERALA INFRASTRUCTURE INVESTMENT FUND BOARD,2ND
FLOOR, FELICITY SQUARE,KODER LN, PALAYAM,
THIRUVANANATHAPURAM, PIN - 695001
W.P(C) Nos.36620 & 36589 of 2024 :4: 2024:KER:82465
5 THE ADDITIONAL CHIEF SECRETARY (FINANCE)
FINANCE (INDUSTRIES & PUBLIC WORKS-B)
DEPARTMENT, GOVERNMENT OF
KERALA,THIRUVANANTHAPURAM, PIN - 695001
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 06.11.2024, ALONG WITH WP(C).36620/2024,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P(C) Nos.36620 & 36589 of 2024 :5: 2024:KER:82465
JUDGMENT
The petitioner is common in both these writ
petitions. The issue raised in these writ petitions is covered
by the judgment of this Court in M/S. Sreedhanya
Construction Company v. State of Kerala and others
[2024 KLT OnLine 2382]. The question framed for
consideration in that case as evident from first paragraph
of the judgment dated 23.09.2024 is as follows:
"Can a person who enters into a contract with
the Government or its agencies that contains a
specific clause that the rate quoted shall be
inclusive of 'GST & other taxes' turn around
and claim that he is entitled to Goods &
Services Tax (GST) over and above the rate
quoted by him? This is the short question that
arises for consideration in these cases. "
2. A perusal of clause 43 of Ext.P1(c)
agreement executed by the petitioner with the 2 nd
respondent (in both cases) reads thus;
" 43.1 The rates quoted by the Contractor shall
be deemed to be inclusive of the GST and other
W.P(C) Nos.36620 & 36589 of 2024 :6: 2024:KER:82465
taxes that the Contractor will have to pay for
the performance of this Contract. The employer
will perform such duties in regard to the
deduction of such taxes at source as per
applicable law."
3. It is therefore clear that the petitioner is
not entitled to any payment of tax over and above the rate
quoted by the petitioner. Though the learned counsel
appearing for the petitioner attempted to establish with
reference to Ext.P1(a) document that the column No.54
which reads 'total amount with taxes', means that taxes
are to be paid in addition, I am of the view that this
contention cannot be accepted.
4. In M/S. Sreedhanya Construction
Company (supra) this Court held as follows:
"6.Having heard the learned Senior Counsel
appearing for the petitioner in these cases
and the learned Government Pleader and
having regard to the facts and
circumstances of these cases, I am of the
view that the petitioner has not made out
any case for grant of reliefs. A reference to
Clause (43.1) of Ext.P1 agreement executed
W.P(C) Nos.36620 & 36589 of 2024 :7: 2024:KER:82465
by the petitioner (in both cases) will clearly
show that the amount quoted by the
petitioner is inclusive of GST and other
taxes. Obviously this was the condition in
the Notice Inviting Tenders also. When the
terms of the agreement executed by the
petitioner clearly show that the rate quoted
by him will be deemed to be inclusive of
GST, the petitioner cannot, on the strength
of the Circulars/letters referred to above,
claim that it is entitled to GST over and
above the amount for which the work was
tendered taking into account the amount
quoted by the petitioner. The contract
conditions are not vague and there is no
occasion to apply a contra proferentem
construction. To be fair to the learned
Senior Counsel for the petitioner he did not
even suggest that such a rule must apply to
the contract in question.
7. The petitioner has no case that
the rates quoted by him were exclusive of
GST. Its case proceeds on the basis that,
going by the Circulars/letters/instructions
referred to above, the Government has
clarified (along with illustrations) that, in
similar situations, the contractor will be
entitled to the rate quoted plus GST at the
W.P(C) Nos.36620 & 36589 of 2024 :8: 2024:KER:82465
rate of 18% and, therefore, it is entitled to
the same. However, this cannot be accepted.
A reading of the letters/instructions referred
to in the writ petitions clearly show that,
those Circulars/letters/instructions do not
apply in a case where the Notice Inviting
Tender or the agreement executed between
the contractor and the tendering agency
clearly specified that the rates quoted shall
be deemed to be inclusive of GST. Though
certain portions of the letter dated
07.05.2024 and the illustrations given
therein, at first blush, appear to support the
case of the petitioner, on closer scrutiny, it
must be held that even those instructions do
not support the case of the petitioner. The
Circulars/instructions referred to above deal
with the preparation of estimate and not
with the final tendering process. It clarifies
that while preparing estimates for the
purpose of administrative/financial sanction,
the estimates must be prepared without
including GST element. However, that does
not lead to a conclusion that in cases where
the agreement is specific that the rates
quotes shall be deemed to be inclusive of
GST, the contractor is still entitled to claim
GST. A glance at Ext.P5 communication
W.P(C) Nos.36620 & 36589 of 2024 :9: 2024:KER:82465
itself indicates that the
Circulars/instructions were intended to
cover various situations as contemplated
therein. For the sake of clarity, the various
situations contemplated following the
migration from the VAT regime to the GST
regime as contained in Ext.P.5 are extracted
below:-
Work Completion Tax liability
Works completed VAT rate
during pre-GST period
and payment fully
received before
30.06.2017
Works completed VAT rate
during pre-GST period
but payment received
partially before
30.06.2017
Work completed during VAT rate
pre-GST period and
part payment received
after 01.07.2017
Work completed during VAT rate
pre-GST period and full
payment received after
01.07.2017
Works completed post- GST rate
GST period and full
payment received after
01.07.2017
W.P(C) Nos.36620 & 36589 of 2024 :10: 2024:KER:82465
Part work completed VAT rate for
during pre-GST period completed works
and part work during pre-GST
completed post GST period
Period irrespective of
the payment.
Remaining works
at GST rate
Works executed in GST GST rate
period and advance
received during pre-
GST period
Agreement executed GST rate
during pre-GST period
and works commenced
in GST period. Payment
not received
Works not yet started, GST rate
but advance received
before 01.07.2017
It is clear from the above that the
communications/instructions referred to above,
on which the petitioner places considerable
reliance, deal with completely different
situations and do not deal with situations
where the rate quoted was deemed to be
inclusive of GST.
8. The submission of the learned
Government Pleader that if the contention of
the petitioner were to be accepted, the sanctity
of the tendering process itself will be affected
W.P(C) Nos.36620 & 36589 of 2024 :11: 2024:KER:82465
is only to be accepted. This can be illustrated
by means of an example. When the tender
document/agreement contemplated that the
rates quoted shall be deemed to be inclusive of
GST and the successful bidder quotes Rs.100/-
for a particular item of work, he cannot be
permitted to, 2024:KER:70722 WP(C)
Nos.33109 & 33117 OF 2024 15 thereafter,
turn around and claim that he must be given
Rs.100/- plus 18% GST (total of Rs.118) as
there may have been situations where another
bidder, after noticing the conditions in the
tender document would have quoted Rs.105/-
inclusive of GST and would not have become
successful on account of the fact that the
successful bidder has quoted only Rs.100/-. In
such a situation, if the successful bidder is
allowed to claim 18% GST over and above the
rate of Rs.100/- quoted by him, the
Government/its agencies would end up paying
Rs.118/- which obviously, cannot be accepted.
For all these reasons, I find no merit
in these writ petitions and they are dismissed
in limine."
5. The learned counsel appearing for the
2nd respondent is right in contending that the issues
W.P(C) Nos.36620 & 36589 of 2024 :12: 2024:KER:82465
raised in these writ petitions are squarely covered
against the petitioner by the judgment in M/S.
Sreedhanya Construction Company (supra). For the
same reasons as stated in the judgment in M/S.
Sreedhanya Construction Company (supra), these
writ petitions are liable to be dismissed.
6. The contention of the learned counsel
for the petitioner that the judgment of this Court in M/S.
Sreedhanya Construction Company (supra) has not
considered Ext.P6 notification dated 24.08.2024 issued
by the State GST Department also does not compel me to
take a view different from the view I have taken in M/S.
Sreedhanya Construction Company (supra). No
instruction issued by the State GST Department can
modify the terms of an agreement entered into by the
petitioner with the 2nd respondent and since the terms of
the agreement entered into by the petitioner with the 2 nd
respondent clearly specifies that the petitioner has to
quote a rate inclusive of taxes and the clause specifically
mentions GST as well, it is not open to the petitioner to
W.P(C) Nos.36620 & 36589 of 2024 :13: 2024:KER:82465
turn around and now say that the petitioner is entitled to
payment of GST over and above the rate quoted by him,
even if such claim is based on any instructions issued by
the State GST Department.
Writ petitions fail and are accordingly dismissed.
Sd/-
GOPINATH P.
JUDGE
SCB
W.P(C) Nos.36620 & 36589 of 2024 :14: 2024:KER:82465
APPENDIX OF WP(C) 36589/2024
PETITIONER EXHIBITS
EXHIBIT P1 COPY OF THE RELEVANT PAGE OF AGREEMENT
EXECUTED BETWEEN THE PETITIONER AND
THE 2ND RESPONDENT DTD. 10-05-2018.
EXHIBIT P1 (A) COPY OF THE RELEVANT PAGES OF ITEM
RATE BOQ STATEMENT DTD. NIL
EXHIBIT P1 (B) COPY OF RELEVANT PAGE OF THE AGREEMENT
REGARDING PAYMENTS DTD. NIL
EXHIBIT P1 (C) COPY OF RELEVANT PAGE OF THE AGREEMENT
REGARDING TAX DTD. NIL
EXHIBIT P2 COPY OF THE CIRCULAR NO. 79/2022/FIN
ISSUED BY THE 4TH RESPONDENT DTD.
15-09-2022
EXHIBIT P3 COPY OF THE CIRCULAR NO. 18/2019/FIN
ISSUED BY THE 4TH RESPONDENT DTD.
01-03-2019
EXHIBIT P4 COPY OF LETTER SUBMITTED BY THE
PETITIONER BEFORE THE 4TH RESPONDENT
DTD. 12-03-2022.
EXHIBIT P5 COPY OF LETTERNO. D1/60/2024-PWD
ISSUED BY THE DEPUTY SECRETARY, PUBLIC
WORKS DEPARTMENT, THIRUVANANTHAPURAM
TO THE CHIEF ENGINEER, BRIDGES
DIVISION, THIRUVANANTHAPURAM DTD.
02-08-2024.
EXHIBIT P6 COPY OF LETTER ISSUED BY THE 1ST
RESPONDENT TO THE SECRETARY, KOCHI
MUNICIPAL CORPORATION DTD. 24-08-2024.
W.P(C) Nos.36620 & 36589 of 2024 :15: 2024:KER:82465
APPENDIX OF WP(C) 36620/2024
PETITIONER EXHIBITS
EXHIBIT P1 COPY OF THE RELEVANT PAGE OF AGREEMENT
EXECUTED BETWEEN THE PETITIONER AND
THE 2ND RESPONDENT DTD. 10-05-2018
EXHIBIT P1 (A) COPY OF THE RELEVANT PAGES OF ITEM
RATE BOQ STATEMENT DTD. NIL
EXHIBIT P1 (B) COPY OF RELEVANT PAGE OF THE AGREEMENT
REGARDING PAYMENTS DTD. NIL
EXHIBIT P1 (C) COPY OF RELEVANT PAGE OF THE AGREEMENT
REGARDING TAX DTD. NIL
EXHIBIT P2 COPY OF THE CIRCULAR NO. 79/2022/FIN
ISSUED BY THE 4TH RESPONDENT DTD.
15-09-2022
EXHIBIT P3 COPY OF THE CIRCULAR NO. 18/2019/FIN
ISSUED BY THE 4TH RESPONDENT DTD.
01-03-2019
EXHIBIT P4 COPY OF LETTER SUBMITTED BY THE
PETITIONER BEFORE THE 4TH RESPONDENT
DTD. 12-03-2022
EXHIBIT P5 COPY OF LETTERNO. D1/60/2024-PWD
ISSUED BY THE DEPUTY SECRETARY, PUBLIC
WORKS DEPARTMENT, THIRUVANANTHAPURAM
TO THE CHIEF ENGINEER, BRIDGES
DIVISION, THIRUVANANTHAPURAM DTD.
02-08-2024
EXHIBIT P6 COPY OF LETTER ISSUED BY THE 1ST
RESPONDENT TO THE SECRETARY, KOCHI
MUNICIPAL CORPORATION DTD. 24-08-2024
