GST reimbursement cannot be denied by applying pre-GST provisions to post-GST contracts.

The petitioner, a sole proprietorship firm registered under the CGST Act and the WBGST Act, sought reimbursement of GST paid on Works Contract Services supplied during the financial years 2017–18 and 2018–19, after the implementation of GST on 1 July 2017.

The petitioner contended that paragraph 3(iv) of Notification No. 5050-F(Y) dated 16 August 2017 applied only to pre-GST contracts, whereas paragraph 4 governed post-GST contracts and ongoing projects whose estimates had been approved before 1 July 2017.

The petitioner alleged that the respondents’ refusal to reimburse the GST component was arbitrary, unreasonable and violative of Article 14 of the Constitution.

Reliance was placed on Sushil Kumar Thard v. National Jute Manufactures Corporation Ltd. and Mridula Paul v. The Executive Engineer, WBSRDA & Ors.

The State was unable to contradict the petitioner’s submissions.

Whether paragraph 3(iv) of Notification No. 5050-F(Y) dated 16 August 2017 could be invoked to deny reimbursement of GST paid on contracts executed after 1 July 2017.

Whether the petitioner was entitled to consideration of its claim for reimbursement of the GST component paid on gross bills for 2017–18 and 2018–19 under paragraph 4 of the Notification.

Whether the respondents’ refusal to consider the reimbursement claim was arbitrary and inconsistent with the obligation of State instrumentalities to act fairly and reasonably in contractual matters.

The Court applied Notification No. 5050-F(Y) dated 16 August 2017, particularly paragraph 3(iv), which was treated as confined to pre-GST contracts, and paragraph 4, which contemplated the applicability of GST rates to post-GST contracts and ongoing projects where estimates had been approved before 1 July 2017.

The Court also relied on Article 14 of the Constitution and the principle that the State and its instrumentalities must act fairly, reasonably and in a non-arbitrary manner even in contractual matters, as recognised in Sushil Kumar Thard v. National Jute Manufactures Corporation Ltd.

The Court further considered the principle reflected in Mridula Paul v. The Executive Engineer, WBSRDA & Ors.

The Court interpreted paragraph 4 of the Notification as expressly providing that GST would apply to post-GST contracts and ongoing projects in which the estimates had been approved before 1 July 2017, including supplies of goods, services or works contracts.

It therefore held that the respondents had misconstrued the Notification by relying on paragraph 3(iv), which was limited to pre-GST contracts, to reject reimbursement for work executed after the introduction of GST.

However, the Court clarified that it had not adjudicated the petitioner’s substantive entitlement to reimbursement.

Since the petitioner claimed to have paid the GST component from its own funds, the appropriate course was to direct the competent authority to reconsider the claim under paragraph 4 after providing a hearing.

The authority was directed to consider the claim in light of paragraph 4 of Notification No. 5050-F(Y), provide the petitioner an opportunity of personal hearing, and pass a reasoned and speaking order in accordance with law, preferably within six weeks from communication of the order.

Until the final decision, no coercive action was to be taken against the petitioner.

The petition and CAN 1 of 2026 were disposed of without any order as to costs.