Services completed before GST remain governed by pre-GST service tax, despite subsequent invoicing or approval.

The petitioner, an enlisted contractor of WBSEDCL, was engaged to deploy technical personnel for repair and maintenance of feeder lines emanating from the Belmuri 33/11 KV Sub-Station for the period from 1 January 2015 to 31 December 2015.

Although the work was performed during 2015, WBSEDCL granted post-facto approval on 26 February 2018 and specified the amounts payable to the petitioner.

The petitioner submitted twelve monthly bills on 22 February 2019, but WBSEDCL withheld payment of Rs. 19,91,148/- on the ground that the petitioner had not complied with GST-related formalities and that GST was payable.

A separate civil suit instituted by M/s Aim Light against the petitioner, in which WBSEDCL was also impleaded, was pending; however, no interim order restrained WBSEDCL from making payment to the petitioner.

Whether GST was payable on services relating to deployment of technical personnel that had been rendered and completed during 1 January 2015 to 31 December 2015, notwithstanding the post-facto approval granted in 2018 and submission of bills in 2019?

Whether WBSEDCL could withhold the admitted payment on the ground of non-compliance with GST formalities?

Whether the petitioner was entitled to interest on the withheld amount and, if so, at what rate?

The Court applied Section 2(102) of the West Bengal Goods and Services Tax Act, 2017, under which “services” mean anything other than goods, money and securities, and Sections 13(1) and 13(2), which determine the time of supply of services.

It principally relied on Section 142(11)(b) of the GST Act, which provides that no tax is payable under the GST Act to the extent tax was leviable on the service under Chapter V of the Finance Act, 1994.

The Court also relied on Memorandum No. 5050-F(Y) dated 16 August 2017 issued by the Finance Department, Government of West Bengal, which clarified that where services were supplied before 1 July 2017 but the bill was raised thereafter beyond the prescribed period, the applicable liability would be under the erstwhile Service Tax regime and not under CGST/WBGST.

The governing principle was that the date of actual supply or completion of the service, and not the date of post-facto approval or delayed billing, determines the applicable tax regime.

The Court held that the petitioner’s service had been fully rendered during 2015, well before the GST regime commenced on 1 July 2017.

The post-facto approval dated 26 February 2018 merely regularised the work already performed and did not alter the date of supply.

Similarly, the bills submitted in February 2019 could not bring a completed pre-GST service within the GST regime.

Applying Section 142(11)(b) and the State Government’s clarification, the Court concluded that any tax liability, if otherwise applicable, could arise only under the pre-GST Service Tax regime and not under the GST Act.

Since no injunction prevented payment in the pending civil suit, the pendency of that proceeding did not justify indefinite withholding of the amount.

Considering the existence of a genuine dispute regarding taxability, the Court declined the claimed interest of 12% and awarded interest at 8% per annum.

The writ petition was disposed of with a direction to WBSEDCL to pay Rs. 19,91,148/- to the petitioner, together with interest at 8% per annum from 22 February 2019, the date of submission of the bills, until actual payment.

Payment was directed to be made within four weeks from communication of the order, after deducting any applicable pre-GST tax.

There was no order as to costs.