Kushan Choudhury vs. The State Of Assam And 3 Ors., The Director Social Welfatre, The Commissioner Of Taxes, The Joint Commissioner Of Taxes
(Gauhati High Court, Assam)

Case Law
Petitioner / Applicant
Kushan Choudhury
The State Of Assam And 3 Ors., The Director Social Welfatre, The Commissioner Of Taxes, The Joint Commissioner Of Taxes
Gauhati High Court
Mar 12, 2020
Order No.
Case No. : WP(C) 3197/2019
TR Citation
2020 (3) TR 1625
Related HSN Chapter/s
Related HSN Code



Heard Mr. A.K. Jain, learned counsel for the petitioner and Mr. B. Deuri, learned Government Advocate, Assam, for respondent Nos.1 and 2. Also heard Mr. A. Chaliha, learned Standing Counsel, Taxation Department, for respondent Nos.3 and 4

2. The matter pertains to determination of the quantum of tax liability to be paid by the petitioner upon successful execution of works contract, as to whether it should be determined as per the GST regime @ 12% or under the VAT regime @5%.

3. The petitioner claims that the petitioner is a Government registered Contractor of Class I(A) category under the PWD (Building) having Registration No. APWD-B/1(A)/18- 19/259/8/GNL and PAN No. AENPC7437G.

4. On 17.01.2014, the Director of Social Welfare, Government of Assam floated a tender notice for construction of Anganwadi Centres in different areas of Assam during 2013-2014 @₹ 4.50 lakhs each. It was clearly mentioned in the tender notice that the rate was inclusive of all taxes including VAT and administrative charges, etc. The petitioner having successfully bided, was awarded the said contract in respect of the three works which he successfully completed during the year 2015-2016 during the VAT regime. However, the payment to the extent of ₹ 3,05,64,387/- and 3,83,84,601/- towards the said work was made on 21.11.2017 and 27.11.2019 respectively.

5. According to the petitioner, since the petitioner had successfully executed the work during the VAT regime, he would be entitled to pay only 5% VAT liability and not 12% under the GST regime which came into operation on implementation of the Goods and Services Act, 2017 with effect from 01.07.2017.

6. Since the petitioner is of the opinion that the petitioner would be liable to pay tax under the VAT regime and not under the GST regime, the petitioner sought clarification from the Commissioner of Taxes, Assam by submitting a representation on 05.02.2019 to allow him to pay 5% VAT/tax liability on the works contract. The said representation, however, was disposed of by the Commissioner of Taxes, Assam by merely mentioning the provisions of law and not really deciding as to whether the petitioner would be liable to pay tax under the VAT regime or GST regime.

7. Respondent Nos.3 and 4 have filed their affidavit-in-opposition in this writ petition.

They have clarified the position that under the GST law, tax liability arises on happening of a taxable event, i.e., supply of goods and services and a contract executed before 1st July, 2017 will attract liability under the GST if the supply is made post 1st July, 2017 and payment is received in the GST regime. Accordingly, even if the agreement is made prior to 01.07.2017, the liability to pay GST will arise at applicable rate if the supply is made or invoice is raised during the GST period, i.e., on or after 01.07.2017 and the payment is received thereafter.

The aforesaid stand has been taken in terms of the Circular No.3/2017-GST dated 24.08.2017 which clearly defines the mechanism for payment of GST and deduction of tax at source (TDS) in respect of works contractors and suppliers.

8. The aforesaid Circular dated 24.08.2017 has provided the detailed methodology for payment of tax by way of TDS in respect of works executed during and post VAT period.

9. This Court is of the view that under such circumstances, the Commissioner of Taxes, Assam will decide the exact liability of the petitioner to pay tax by referring to the said Circular No.3/2017-GST dated 24.08.2017 so that the petitioner can pay tax as liable to be paid by him either under the rate fixed under the VAT regime or under the GST regime, as the case may be.

10. Accordingly, the matter is remanded to the Commissioner of Taxes, Assam for determination of tax liability of the petitioner which may be decided on the basis of the Circular dated 24.08.2017 and the petitioner will accordingly deposit the determined tax amount. However, it goes without saying that if the petitioner is aggrieved by such determination of tax liability, the petitioner will be at liberty to approach appropriate forum including the High Court as per law for redressal of his grievances.

11. The petitioner will submit a detail application with all supporting documents before the Commissioner of Taxes, Assam within a period of two weeks from the date of receipt of a certified copy of this order and thereafter the Commissioner of Taxes, Assam shall determine the tax liability in terms of the observations made above.

12. The writ petition is accordingly disposed of.

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