2025-VIL-1316-MAD
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SGST High Court Cases

GST – Applicable GST rate on Government construction contracts - Construction of commercial complex for Tamil Nadu Housing Board (TNHB) - The TNHB applied a reduced GST rate of 12% instead of the statutory rate of 18% as per the GST notification, resulting in an underpayment of 6% GST for the petitioner's work from July 1, 2017 onwards - The DGGI issued notice to the petitioner demanding payment of interest and penalty for the underpaid GST - Whether the petitioner is entitled to the difference in GST paid at 12% instead of the statutory rate of 18% as per the Notification No.11/2017 Central Tax (Rate) – HELD - The Government of Tamil Nadu had issued notifications in 2017, which established that the liability under the GST regime shall be borne by the procuring entity (in this case, the TNHB). The notifications laid down detailed guidelines for evaluating the net change in tax liability on contracts due to the introduction of GST, and directed all Departments to make on-account payments to contractors restricting it to the value due as per the existing contract agreement, until the notification of guidelines - The TNHB, through its own board resolution, had resolved to adopt the GST rate of 18% for saleable projects from July 1, 2017. However, it had continued to apply the reduced 12% GST rate in its payment certifications to the petitioner, resulting in an underpayment of 6% GST - Since the GST liability is to be borne by the procuring entity as per the Government notifications, the TNHB is liable to pay the petitioner the difference in GST paid at 12% instead of the statutory 18% rate - The TNHB is directed to consider the petitioner's representation on its own merits and pass appropriate orders in accordance with the law – The writ petition stands disposed of
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