Jammu & Kashmir High Court
M/S Kapil Kumar Khattar Through Its … vs Union Of India Through It Secretary on 8 April, 2025
Bench: Sanjeev Kumar, Puneet Gupta
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
Reserved on: 02.04.2025
Pronounced on:08.04.2025
RP No.42/2024
,
M/s Kapil Kumar Khattar Through its partner Sunil Khattar
S/o S. Kapil Kumar Khattar R/o H.No.111, Patta Paloura, Opp. BSF
Campus, Talab Tillo, Jammu
Flat No.102, Block-A, Kamdhenu Homz, Toph Sherkhania,
Near Best Price Akhnoor Road, Jammu.
...Petitioners(s)
Through:- Mr. Ajay Kumar Vali, Advocate with
Mr. Raghav Gaind, Advocate
Versus
1. Union of India through it Secretary, Ministry of Defence,
101-A South Block, New Delhi-110011
2. Engineer in Chief Branch
Military Engineering Services
Kashmir House Rajaji Marg,
New Delhi-110011
3. HQ Chief Engineer, Udhampur Zone
C/o 56 APO
4. PCDA Northern Command
Narwal Pain, Satwari, Jammu
5. Garrison Engineer 881 EWS
PIN-900234 C/o 56 APO
...Respondent(s)
Through:- Mr. Vishal Sharma, DSGI
Coram: HON'BLE MR. JUSTICE SANJEEV KUMAR, JUDGE
HON'BLE MR. JUSTICE PUNEET GUPTA, JUDGE
JUDGMENT
Sanjeev Kumar “J”
1. This review petition by M/s Kapil Kumar Khattar through its
Partner Sunil Khattar seeks review of our judgment dated 3rd
RP No.42/2024 2
November, 2023 passed in WP(C) No.1379/2021 titled M/s Kapil
Kumar Khattar v. Union of India and others.
2. Before we advert to the grounds for review urged by the learned
counsel appearing for the review petitioner, we deem it necessary to
give few background facts leading to the filing of this review petition.
3. Vide SRO-GST-11 dated 8th July, 2017, the Government of
Jammu & Kashmir notified different rates of taxes on intra-State
supply of services of various description. The construction services
under Heading 9954 were notified to be taxed at the rate of 9%.
However, in the 20th GST Council meeting held on 5th August, 2017, a
decision was taken to reduce the rate of GST on Works Contract
Services from 18% to 12 %. This information, as is claimed by the
review petitioner, was available with the review petitioner when it
submitted its tender. The review petitioner submitted his tenders after
the decision of GST Council recommending reduction of rate of GST
on works contract from 18% to 12%. Formal notification by the
Government of Jammu & Kashmir in terms of SRO-GST-06 (Rate)
notifying the new rates of GST was issued on 21 st September, 2017,
which was admittedly after the submission of the bid by the review
petitioner as also the last date fixed in the tender for submission of bids
i.e. 16th September,2017. The GST rates came to be reduced from 18%
to 12% vide notification dated 21st September, 2017. The review
petitioner submitted its bid on 28th August, 2017 which was accepted
RP No.42/2024 3
and works were allotted and commenced after the issuance of
notification dated 21st September, 2027. The review petitioner like the
other similarly situated contractors was issued a letters dated 16th June,
2021 by respondent No.5 calling upon him to deposit the differential
amount of tax by 30th June, 2021.
4. M/s Pardeep Electricals and Builders Private Limited, a
construction company, who was also faced with the similar notice,
approached this Court way of WP(C) No.2183/2019, which came to
be disposed of along with three other connected matters vide judgment
dated 23rd December, 2020. Paragraph Nos.3, 4 and 5 of the Division
Bench judgment dated 23rd December, 2020 are reproduced by us in
paragraph No.8 of the judgment sought to be reviewed. A categoric
finding was returned by this Court that there was no dispute that the
rate of tax on the contracts, on the last date of submissions of bids, in
all cases was 18%, which was subsequently reduced to 12%. This
Court, however, found that the notices for recovery of the differential
amount issued by the respondents were in violation of the principles of
natural justice, in that, the contractors had not been given an
opportunity of hearing so as to enable them to point out that the
amount of tax as demanded by the respondents was not due even after
the reduction of rates, if calculated properly. The Court further
clarified that the liability to pay tax was not in dispute and it was only
the quantum. The controversy should have rested there. Unfortunately,
M/s Pardeep Electricals and Builders Private Limited and many others
RP No.42/2024 4
including the review petitioner herein raked up the same issue yet
again by filing different writ petitions. The writ petition filed by
Pardeep Electricals and Builders Private Limited [WP(C)
No.170/2021] was decided vide judgment dated 3rd November, 2023.
The plea of the petitioner therein that they had taken into consideration
the reduction of GST on works contract from 18% to 12%, as
recommended by the GST Council in its 20th meeting held on 5th
August, 2017 and, accordingly, made their bids, was considered and
rejected. This Court was of the opinion that the GST Council in its
meeting had only made a recommendation for reduction GST on works
contract from 18% to 12%, which recommendations were accepted and
statutory notification was issued only on 21st September, 2017. This
Court also took note of the issue having been already decided by the
Division Bench of this Court in its judgment dated 23.12.2020 passed
in WP(C) No.2183/2019 along with three other connected matters.
This is how this Court, in terms of its judgment dated 03.11.2023,
reiterated what was said by the earlier Division Bench and dismissed
the petitions. The writ petition filed by the review petitioner herein i.e.
WP(C) No.1379/2021 was also premised on similar grounds. The same
was taken up along with other similarly situated petitions and vide
order dated 03.11.2023, the same was also dismissed in light of the
judgment dated 03.11.2023 passed in WP(C) No.170/2021. It is this
judgment passed by us the petitioner is aggrieved of and seeks review
of the same.
RP No.42/2024 5
5. The review is sought by the review petitioner on the ground that
this Court has not appreciated that the order allotting the work to the
review petitioner was issued after 21st September, 2017 i.e. after the
rate of tax stood already reduced and that this Court also did not
appreciate and take into consideration that even Condition No.49 of the
Special Conditions of tender document was in the teeth of the statutory
provisions of the GST Act. It is submitted that, in terms of Section 13
of the Central Goods and Services Tax Act, 2017, liability to pay tax
on services arise at the time of supply, as determined in accordance
with the provisions of Section 13. It was, thus, sought to be argued that
Condition 49 of the Special Conditions of Tender Document, which we
have reproduced in paragraph No.12 of the judgment, was in the teeth
of the aforesaid statutory provisions. Special Condition 49, though part
of contract, ought to have been ignored by the Division Bench. The
argument was also put forth by the learned counsel appearing for the
review petitioner that in terms of SRO GST-06 dated 21.09.2017, there
was no reduction of GST on Works Contract and the Works Contract
continued to be governed by SRO-GST-02 dated 22nd August, 2017,
which had notified the rate of GST for Works Contract as 12%. It was,
thus, sought to be contended that bid(s), which the petitioner
submitted, were keeping in view SRO dated 22nd August, 2017 and,
therefore, it was not a case of reduction of GST from 18% to 12%
authorizing the respondents to recover the differential amount from the
petitioner.
RP No.42/2024 6
6. The review petition is contested by the respondents. Mr. Vishal
Sharma, learned DSGI countered the arguments of learned counsel for
the petitioner by submitting that all the issues, which the review
petitioner is seeking to raise in this review petition, have already been
set at rest by this Court in WP(C) No.2183/2019 decided on
23.12.2010 and the judgment dated 03.11.2023 passed by this Court in
WP(C) No.170/2021. The review petitioner was fully covered by the
aforesaid judgment and, therefore, his petition was rightly dismissed
by this Court. He would submit that in the absence of demonstration of
any error apparent on the face of record, the review jurisdiction cannot
be exercised by this Court to recall its order, which has since attained
finality. Mr. Sharma would submit that the learned counsel for the
petitioner, in the garb of review petition, has thrown challenge to a
concluded judgment of this Court on selfsame old grounds without
there being any new fact or law brought to the notice of the Court.
7. Having heard learned counsel for the parties and perused the
material on record, we are of the considered opinion that the judgment
passed by this Court does not suffer from any error apparent on the
face of record nor there is discovery of any new fact, which was not in
the knowledge of the review petitioner when the judgment sought to be
reviewed was passed. The review petitioner has also not been able to
point out any other sufficient reason, which would persuade us to
recall our well considered judgment.
RP No.42/2024 7
8. Special Condition 49, as reproduced in paragraph No.12 of the
judgment passed in M/s Pardeep Electricals and Builder Pvt. Ltd,
makes it abundantly clear that the rate quoted by the contractor shall be
deemed to be inclusive of all taxes, duties, royalties, octroi and other
levies payable under the respective statutes. The tendered rates shall be
deemed to be inclusive of all “taxes directly related to contract value”
with existing percentage rates prevailing on the last due date for
receipt of tenders. Any increase in percentage of rate of “taxes
directly related to contract value” with reference to prevailing rates on
last due date for receipt of tenders shall be reimbursed to the contractor
and similarly any decrease in percentage rate of “taxes directly related
to contract value” with reference to prevailing rates on last due date for
receipt of tenders shall be refunded by the contractor to the
Government/deducted by the Government from any payment due to
the contractor.
9. From a plain reading of Clause 49, in its entirety, it becomes
abundantly clear that the rates quoted by the contractor in his tender
shall be inclusive of all taxes related to contract value, which would
obviously include GST. The rate quoted by the contractor shall be
taken to be inclusive of GST with existing percentage rate as
prevailing on the last date for receipt of tenders.
10. Indisputably, on the date review petitioner submitted his tender
and even on the last date due for receipt of tenders, the rate of GST
RP No.42/2024 8
was 18%. It is true that before the last date of submission of bids, there
was a decision taken by the GST Council on 5th August, 2017
recommending reduction of taxes on works contract from 18% to 12%,
but the said recommendation fructified into issuance of statutory
notification only on 21st September, 2017. Recommendations of the
GST Council, as already held, are only recommendations and cannot
be taken as notifying new rates of GST, particularly, in the face of
provisions of Article 265 of the Constitution of India. We have
already dealt with this issue elaborately in our judgment passed in M/s
Pardeep Electricals and Builders Pvt. Ltd. and do not wish to repeat the
same while deciding this review petition.
11. Suffice it to say that in view of the clear provisions of Special
Condition No.49 existing in the contract agreement, it cannot be
contended by the review petitioner that the aforesaid condition in the
contract is not in consonance with the various provisions of GST Act,
more particularly, when there was no challenge laid to the aforesaid
condition by the review petitioner at any point of time. Otherwise also,
looking to the provisions of Section 13 and 14 of the CGST Act and
the effect of change in rates of taxes in respect of supply of goods and
services, we can say that the argument built on these provisions does
not advance the case of the review petitioner. The review petitioner
being one of the contracting party is bound by the Special Condition
No.49 of the Contract Agreement, which clearly provides for
reciprocal liability of both parties. It clearly and in no uncertain terms
RP No.42/2024 9
provides that the Contractor shall include in the tender rates of taxes
directly related to the contract value with existing percentage rates as
prevailing on the last due date for receipt of tenders and if there is any
subsequent increase in percentage rates of taxes, same shall be
reimbursed to the contractor and similarly, if there is any decrease, the
differential amount shall be refunded by the contractor to the
Government or deducted by the Government from any payment due to
the contractor.
12. We fail to understand how incidence of GST or the manner in
which the change in rates of taxes in respect of supply of goods and
services would impact the charging of GST is of any help to the review
petitioner. Otherwise also, neither Special Condition 49 of the Contract
Agreement was under challenge nor any argument in this regard was
made before us when we decided the matter on 3rd November 2023.
13. We shall be failing in our duty if we do not address another
argument which for the first time was urged before us on behalf of the
review petitioner. It was argued that the contract which the review
petitioner executed was governed by SRO-GST-2(Rate) dated 22nd
August, 2017, whereby the composite supply of works contract was
made exigible to GST @ 12% and therefore, subsequent SRO issued
on 21st September, 2017 was not applicable. He relies upon S.No.3 of
the Notification dated 22nd August, 2017, which deals with composite
supply of works contract, as defined in Clause 119 of Section 2 of
RP No.42/2024 10
CGST Act, 2017, supplied to Government, a local authority or a
Governmental authority by way of construction, erection,
commissioning, installation, completion, fitting out, repair,
maintenance, renovation, or alteration of the following:-
(a) A historical monument, archaeological site or remains of
national importance, archaeological etc;
(b) Canal, dam or other irrigation works;
(c) Pipeline, conduit or plant for
(i) Water supply
(ii) Water treatment, or
(iii) Sewerage treatment or disposal
It is submitted that in terms of aforesaid notification, notified
rate existing at the time of submission of bids was 12%, which was
taken into consideration by the review petitioner at the time of
submission of his bids. The notification dated 21 st September, 2017
does not touch upon the works contract and, therefore, should be held
inapplicable.
14. We have given our thoughtful consideration to the aforesaid
aspect of the matter.
15. Suffice it to say that in terms of SRO-GST-11 dated 8th July,
2017, the construction services falling under Section 5 Heading 9954
were taxable @ 18%. The composite supply of works contract as
defined in clause 119 of Section 2 of the CGST Act, 2017 was
RP No.42/2024 11
included in the aforesaid heading. The subsequent notification SRO-
GST-2(Rate) dated 22nd August, 2017 did not bring any change with
regard to the construction services rendered in the shape of composite
supply of works contract. SRO-GST-2(Rate) dated 22nd August, 2017
brought about changes in the rates of GST only with respect to specific
composite supply of works contract, which, as indicated above, were
the works contracts supplied to Government, a local authority or a
Governmental authority by way of construction, erection,
commissioning, installation etc of specified items like a historical
monument, canal, pipeline conduit etc. This is evident from Clause (iii)
of Notification dated 22nd August, 2017. Similarly, Clause (v) of the
said notification deals with composite supply of works contract
supplied by way of construction, erection, commissioning or
installation of original works pertaining to railways, a single residential
units other than as a part of a residential complex, low-cost housing etc
etc. GST Notification dated 22nd August, 2017 brought about changes
in respect of item No.(iii) of Serial No.3 of SRO-GST 11 dated 8th
July, 2017. For facility of reference, clause (iii) of Notification dated
8th July, 2017 reads as under:-
“(iii) construction services other than (i) and (ii) above.”
16. The composite supply of works contract as defined in Clause
119 of Section 2 of Central Goods and Services Tax Act, 2017 figures
at item No. 3(ii) of Notification dated 8th July, 2017 prescribing 18%
RP No.42/2024 12
GST was not altered by SRO-GST-2(Rate) dated 22nd August, 2017.
What was sought to be amended and elaborated by notification dated
22nd August, 2017 was only item No.(iii) at serial No.3 dealing with
construction services other than composite supply of works contract
mentioned in item No.3(ii) and the construction services mentioned in
Clause 3(i). The rate of GST prescribed vide notification dated 8th
July, 2017, which was in-vogue at the time of submission of bids by
the petitioner as also on the last due date for submission of bids, on
composite supply of works was 18%. Vide notification dated 21 st
September, 2017, the rate of GST came to be reduced from 18% to
12%.
17. We have dealt with aforesaid argument, as the same was
vehemently argued by the learned counsel appearing for the review
petitioner, though the plea was not specifically pleaded and set up in
the writ petition disposed of by us in terms of the judgment sought to
be reviewed.
18. In view of the foregoing discussion, we do not find any merit in
this petition, the same is, accordingly, dismissed.
(Puneet Gupta) (Sanjeev Kumar)
Judge Judge
JAMMU
08.04.2025
Vinod,PS
Whether the order is speaking : Yes/No
Whether the order is reportable: Yes/No
Vinod Kumar
2025.04.08 18.01
I attest to the accuracy and
integrity of this document
Jammu