MP High Court Dismisses Builder's Plea Seeking Refund Of Differential GST On Account Of Upward Rate Revision

The Madhya Pradesh High Court has dismissed writ petition by a builder seeking reimbursement or refund of differential 6% GST on account of increase in rate (from 12% to 18%) on government works contract w.e.f. July 18, 2022. Pursuant to the recommendation of the 47th GST Council Meeting which approved suggestions of the Group of Ministers on Rate Rationalization, increased GST rate (from 12% to 18%) on works contract was notified vide Notification No. 03/2022 Central Tax (rate) dated July 13, 2022 (Rate Notification). CBIC vide Circular No. 177/09/2022-TRU dated August 03, 2022 clarified certain issues for implementation relating to GST rates on works contract services. The Builder, a developer was awarded a contract for the work of construction of a dam and canal under Dharampura Jalashay Yojna. At the time of execution of the agreement dated August 17, 2022, the applicable GST rate was enhanced to 18% from 12% vide Rate Notification. The builder in a representation to the Madhya Pradesh Government sought for enhancement of the GST rate from 12% to 18%. The Division Bench, comprising Justice Vivek Rusia and Justice Pradeep Mittal on taxability of works contract services, from the contract entered into between the parties inferred that it does not provide for enhancement of tax, therefore, its terms cannot be altered after awarding of contract or during execution. “As per Clause 25.3, the rate of GST on contract service is reduced during the implementation of the contract, then the difference of GST on work contract service rates will be recovered from the date on which the reduction in GST rates shall be effective. There is no agreement in respect of enhancement; there is a situation of enhancement of service tax in the agreement; therefore, the conditions enumerated in the bi-parte contract cannot be changed after awarding of the contract and during execution of the work.” Accordingly, the writ petition was dismissed. Case Name: Ojas Construction through its Partner Rachna Pathak vs. The State of Madhya PradeshCitation: 2025 LiveLaw (MP) 260 Case No.: Writ Petition No. 39844 of 2025 Date of Decision: 17.11.2025 Appearance: Advocates Rakesh Dwivedi appeared on behalf of assessee, whereas Revenue was represented by Government Advocate Rajvardhan Dutt Padraha.Click Here To Read/Download The Order

MP High Court Dismisses Builder's Plea Seeking Refund Of Differential GST On Account Of Upward Rate Revision

Parul Bose

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