Post-Facto Approval Cannot Bring Pre-GST Services Within GST Regime: Calcutta High Court

The Calcutta High Court on 14 September held that post-facto approval of work completed before the introduction of the Goods and Services Tax (GST) cannot alter the date of supply or bring the completed service within the GST regime.

Justice Partha Sarathi Chatterjee allowed a writ petition filed by Goutam Engineering Concern against West Bengal State Electricity Distribution Company Limited (WBSEDCL) and directed the latter to release Rs. 19,91,148 towards payment for technical personnel deployed for repair and maintenance of feeder lines. The Bench observed:

“The post facto approval granted on 26th February, 2018 is of no consequence in determining the point of taxation.”

The dispute concerned payment for work carried out between 1 January 2015 and 31 December 2015. Goutam Engineering Concern had deployed technical personnel for repair and maintenance of feeder lines during this period. WBSEDCL granted post-facto approval for the work on 26 February 2018. The petitioner subsequently raised its bill in February 2019.

The Court held that the service had already been completed before GST came into force on 1 July 2017. It found that the post-facto approval merely regularised or approved work that had already been performed and therefore had no bearing on the point of taxation.

The Bench held that the tax liability was governed by the erstwhile Service Tax regime and not GST. It relied on Section 142(11)(b) of the GST Act, which deals with taxation of services during the transition from the earlier tax regime to GST, along with a clarification issued by the West Bengal Finance Department concerning pre-GST contracts.

Accordingly, the High Court directed WBSEDCL to release Rs. 19,91,148 to the petitioner with interest at 8% per annum from 22 February 2019 until actual payment. It clarified that any tax payable under the pre-GST regime could be deducted, if otherwise applicable. It further directed that the payment be made within four weeks of communication of the order.