Madras HC directs the State Govt to consider Representation on Revising GST Rate on Works Contracts [Read Order]

The Madras High Court, while disposing a petition filed by the Coimbatore Corporation Contractors Welfare Association, directed the Commissioner of Commercial Taxes to consider the representation on revising of rate of tax on works contract under the new Goods and Services Tax (GST) regime.

The petitioner, an association registered under the provisions of the Tamil Nadu Societies Act challenged the levy of 12 per cent GST on works contract.

According to the petitioners, the Association was formed for the Welfare of the members of the Road Contractors, who have been carrying on works for the National Highways and Highways department and other Governmental organization. They claimed that under the Value Added Tax (VAT) regime, the contractors used to remit 2 per cent tax on value for the works executed by them towards the Works Contract Tax under the Tamil Nadu Value Added Tax (TNVAT) Act, 2006.

Before the High Court, the petitioners made an alternative contention that if the petitioners are compelled to pay anything over and above 2%, the respondent in addition to the value of the work done, has to remit the GST as per the notification, since the representations submitted by the petitioner/ association have not been considered and no orders were passed.

The petitioners sought for the following remedies from the High Court.

1. For the contract work for which agreements were executed prior to 01.07.2017 and the work is in under progress.
2. For the tenders called and agreements executed after 01.07.2017 without any GST Provisions in the estimate and tender.
3. Levy of 12% GST provisions has to be included in the estimates itself for further tenders and has to be paid in addition to the value of work done for all works contracts as in the case of Southern Railways.

After hearing the above contentions, Justice Sivagnanam said that “since the petitioner’s representations are pending, it is appropriate for the respondent to respond to the same by giving them a reply. The appropriate person who would be in a position to give reply is that the Commissioner of Commercial Taxes shall give a reply. Because all other authorities are the department of Highways and National Highways etc., who would not be in a position to specifically address the issue pointed out by the petitioner.”

The Court further directed the Commissioner of Commercial Taxes to consider the representation given by the petitioner/ association and pass orders within a period of four weeks from the date of receipt of a copy of this order.