High Court of Kerala gave an important judgment dated 20th March, 2019 regarding levy and collection of tax in case of Jilmon John V. State of Kerala. The applicant, in response to e-tender notice, submitted a tender taking into account rate of works tax at 4% stipulated in Kerala Value Added Tax Act, 2003.
The Central Goods and Services Tax Act, 2017 (GST Act) was implemented with effect from 1-7-2017 imposing GST at 18% on the value of works and the Superintending Engineer vide letter dated 14-7-2017 accepted the tender submitted by the applicant. The applicant submitted representations requesting either to reimburse the additional tax imposed at 14% over the 4% specified or cancel the notice and release and refund the EMD of Rs. 2 lakhs furnished by it. The State of Kerala sent a letter to the applicant rejecting the request to reimburse differential tax imposed by the GST Act and to release the EMD of INR 2 lakhs.
The Superintending Engineer vide a correspondence directed the applicant to execute an agreement for carrying out the works with GST and petitioner filed a writ seeking to quash the tender and release the EMD of INR 2 Lacs.
HC observed that there is a stipulation in the documents that the Sales Tax as per Rules from time to time is liable to be paid by the applicant and the rates quoted for various items remain unaffected by any changes that may be made on such tax. Thereby if during the course of proceedings or even after execution of the agreement rate of tax is increased, the applicant is liable to pay the same without insisting for any rate variation.
HC also observed that when clause 44 was incorporated in tender notification, introduction of GST was under comprehension and applicant was well aware of the same. Therefore, applicant ought to have visualised such a situation and the rates should have been quoted only in accordance with the same.
Evaluating the entire pros and cons and facts and circumstances of the case, HC held that applicant is not entitled to get any relief as is sought in the writ petition, since there was a clear stipulation that the applicant is liable to pay tax increased from time to time.