Court directs West Bengal State Electricity Distribution Company to pay Rs. 19.91 lakh with interest to contractor for 2015 manpower deployment work exempt from GST under transitional provisions
In a significant ruling on September 14, 2026, the Calcutta High Court clarified the scope of Goods and Services Tax (GST) liability on services rendered before the GST regime commenced on July 1, 2017. The judgment, delivered by Justice Partha Sarathi Chatterjee, held that services completed during the pre-GST period cannot be retrospectively taxed under the GST Act merely because payment claims or approvals were issued after the GST implementation date.
The case arose from a dispute between M/s Goutam Engineering Concern (the petitioner) and West Bengal State Electricity Distribution Company Limited (WBSEDCL). The petitioner had undertaken the deployment of technical personnel for repair and maintenance of feeder lines from the Belmuri 33/11 KV Sub-Station for the full calendar year of 2015. Although the work was completed within that year, post-facto approval was granted only on February 26, 2018, and the corresponding bills were raised on February 22, 2019, well after the GST Act came into effect.
WBSEDCL withheld payment claiming that the petitioner had not complied with GST registration formalities and was liable to pay GST on the amount. The petitioner challenged this withholding through a writ petition, arguing that since the work was executed and completed before GST's effective date, the erstwhile Service Tax regime governed the tax liability, not the GST Act.
Justice Chatterjee examined the relevant statutory provisions, including Section 13 and Section 142(11)(b) of the West Bengal Goods and Services Tax Act, 2017. The court noted that Section 142(11)(b) explicitly exempts tax under GST on services where tax was leviable under the earlier Service Tax regime. The court also referred to a Government of West Bengal memorandum dated August 16, 2017, which clarified that where services were supplied before July 1, 2017, but invoices were raised post that date after a 30-day period, Service Tax-and not GST-was applicable.
The court observed that post-facto approval of the work in 2018 did not alter the actual date of service completion, which was in 2015. Similarly, raising the bill in 2019 did not confer GST liability on the petitioner. Consequently, the petitioner was entitled to the payment due under the pre-GST tax regime.
However, considering that there was a pending civil suit involving a related dispute and no interim order barred payment, the court found the delay in payment not solely attributable to the respondent. Therefore, the court awarded interest at 8% per annum (banking rate), rather than the petitioner's claimed 12%, from the date of bill submission until actual payment.
The court directed WBSEDCL to release Rs. 19,91,148/- along with interest within four weeks after adjusting any tax payable under the pre-GST regime. The ruling underlines the principle that tax laws cannot impose retrospective GST liability on services rendered before the GST regime, even if administrative approvals or billing occur afterward.
This judgment provides clarity for contractors and service providers dealing with transitional tax issues and reinforces the non-retroactivity principle of GST taxation.
Bottom Line:
GST Act, 2017 - Post-GST liability not applicable to services rendered and completed before the GST regime's commencement on July 1, 2017, even if the bill is raised after its implementation.
Statutory provision(s):
West Bengal Goods and Services Tax Act, 2017 Section 2(102), Section 13(1), Section 13(2), Section 142(11)(b); Notification No. 5050-F(Y) dated 16.08.2017; Finance Act, 1994 Chapter V (Service Tax)
