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Case Details: Jharkhand Bijli Vitran Nigam Ltd. vs. Sri Gopikrishna Infrastructure (P.) Ltd. - [2025] 177 taxmann.com 171 (SC)

Judiciary and Counsel Details

Pamidighantam Sri Narasimha & Pankaj Mithal, JJ.
R. Venkataramani, Attorney General for India, Rakesh Dwivedi, Arvind P. Datar, Sr Advs., Kumar Anurag Singh, Ashok Kumar Yadav, Zain A. Khan, Anup Kumar, Ms Ekta Bharati, Advs. & Ms Tulika Mukherjee, AOR for the Petitioner
M.S. Mittal, Kavin Gulati, C. Aryama Sundaram, C.A. Sunderam, Ajit Kumar Sinha, Sr Advs., Salona Mittal, Ms Pragya Choudhary, Jitesh Malik, Byrapaneni Suyodhan, D. Narendra Reddy, Kumar Shashank, Dhiraj, Ashutosh Dubey, Aman Vachher, Akshat Vachher, Ms Abhiti Vachher, Advs., Satish Kumar & Ms Tatini Basu, AORs for the Respondent

Facts of the Case

The petitioner-firms had executed agreements pursuant to Notice Inviting Tenders (NITs) and Letters of Award issued prior to the implementation of the GST regime. In the course of execution of such contracts, the petitioners paid GST on procurement of raw materials, intermediary components, and bought-out items dispatched directly from sub-vendors to the work site. Writ petitions were filed before the High Court seeking reimbursement of such GST paid, including in respect of indirect transactions. The jurisdictional authorities under CGST raised objections contending that the impact of GST on indirect transactions was not reimbursable and was barred under clause 31 of the General Conditions of Contract (GCC). The petitioners submitted that, with the deletion of restrictive stipulations in clause 10.7 of the GCC, the contractual framework envisaged reimbursement of increased tax liability, and such reimbursement could not be denied by reliance on clause 31. They further relied upon section 64A of the Sale of Goods Act, 1930, to contend that their entitlement to adjustment for increased tax liability arising in the course of contract performance was enforceable, except where specifically contracted otherwise. The High Court accepted these submissions and held that the benefit of reimbursement on indirect transactions under the amended clause 10.7 of the GCC could not be denied merely because NITs or agreements were executed in the pre-GST regime, and accordingly directed reimbursement. Aggrieved by the said ruling, the matter was placed before the Supreme Court by way of Special Leave Petition (SLP).

Supreme Court Held

The Supreme Court held that leave to appeal was granted against the High Court’s order which had allowed reimbursement of GST impact on indirect transactions to contractors despite agreements having been executed prior to the GST regime. The Court directed the appellants to deposit fifty per cent of the disputed amount within eight weeks, with the sum to be invested in an interest-bearing fixed deposit in a nationalised bank on an auto-renewal basis, pending final adjudication. The Court noted that the matter would be listed for final hearing in 2025. The judicial determination signifies that while the High Court’s interpretation of clause 10.7 of the GCC, read with section 64A of the Sale of Goods Act, 1930, had been favourable to contractors, the issue now stands open before the Supreme Court.