GST · F2J-C-2801
M/s Indu Construction v. Nagpur Improvement Trust & Ors.
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Holding (ratio)
GST introduced after a pre-GST tender could not be treated as embedded in the contractor's quoted rates through a later clarification.
Operative order (extract)
ORDER i) The Writ Petition is allowed. hereby quashed and set aside and consequently, we
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Complete searchable judgment text
2026:BHC-NAG:9335-DB
1 911) WP 1867-23-J.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH AT NAGPUR
WRIT PETITION NO. 1867 OF 2023
M/s Indu Construction, a Proprietorship
Firm, through its Proprietor Shri Nitin S/o
Nagorao Gabhane, aged about 57 years,
having its office in front of Telephone
Office, Camp, Amravati - 444602
... PETITIONER.
// VERSUS //
1. Nagpur Improvement Trust, through its
Chairman, having its Office at Station
Road, Sadar Nagpur, 440001.
2. Nagpur Metropolitan Regional
Development Authority, Nagpur
(NMRDA), through its Chairman.
3. Superintending Engineer, Nagpur
Metropolitan Region Development
Authority.
4. Chief Accounts Officer, Nagpur
Metropolitan Region Development
Authority.
5. Superintending Engineer, Nagpur
Metropolitan Region Development
Authority.
2 911) WP 1867-23-J.odt
(All 2 to 5 having their Office at 2nd
Floor, NIT Complex, Opposite Sudama
Cinema, Gokulpeth, Nagpur-440010)
... RESPONDENTS.
-------------------------------------------------------------------------------
Shri M.G.Bhangade, Senior Advocate a/b. S/Shri M.M.Agnihotri and
P.L.Sagdeo, Advocates for petitioner.
Shri G.A.Kunte, Advocate for respondent Nos. 1 to 5.
-------------------------------------------------------------------------------
CORAM : ANIL S. KILOR AND
RAJ D. WAKODE, JJ.
DATED : JULY 16, 2026.
ORAL JUDGMENT : (Per : Anil S. Kilor, J)
1. Heard.
2. RULE. Rule made returnable forthwith. Heard finally
by consent of the learned counsel for the parties.
3. In the present petition, the challenge is made to the
communication dated 20/12/2022 issued by the respondent-
Nagpur Metropolitan Region Development Authority
denying the claim made by the petitioner of Goods and
Service Tax (GST) reimbursement against Tender No. 1
dated 30/07/2014.
3 911) WP 1867-23-J.odt
The brief facts of the present case are as under:
4. The petitioner is a Proprietorship Firm engaged in
Construction. The petitioner participated in the tender
floated by respondent(s) on 02/06/2014 for construction of
“Affordable housing on land bearing Khasra No. 54, Mouza
Wathoda, City Survey No. 173, Shesh Nagar, Middle Ring
Road, Nagpur.”
5. The petitioner being successful bidder, the work
order was issued in favour of the petitioner on 25/08/2014.
The work was completed and the work completion certificate
was issued in the name of the petitioner.
6. On 08/06/2022, the petitioner submitted a letter for
GST reimbursement claim against an Agreement No.
B1/186/(2014-2015) for RA Bill Nos.14 to 29. This is in view
of the fact that, on the date of tender, GST was not in
existence, which came into force w.e.f. 01/07/2017 and
according to the petitioner, the petitioner is not liable to pay
GST in view of terms of the tender and accordingly, he claims
reimbursement of GST. Furthermore, the case of the
4 911) WP 1867-23-J.odt
petitioner is that he is not liable to pay GST based on
Government Resolution (GR) and Government Circular.
The Government Circular is dated 19/09/2017 and the
Government Resolution (GR) is dated 21/01/2021.
7. In addition, the basis to claim GST reimbursement
was the reimbursement made in favour of the contractors like
the petitioner.
8. The claim of the petitioner for GST reimbursement
was verified by the respondents through the Chartered
Accountant (CA) namely Rodi Dabir and Company, vide
certificate dated 28/06/2022.
9. After six months of such verification, the impugned
communication came to be issued denying the claim of the
petitioner. Hence, this petition.
10. We have heard Shri Bhangade, the learned senior
counsel assisted by Shri M.M.Agnihotri, the learned counsel
for the petitioner. It is submitted that the Clauses of the
tender namely Clauses 25 and 48 on which the reliance is
placed for denial of claim of the petitioner, were part of the
5 911) WP 1867-23-J.odt
tender floated in the year 2014, whereas the GSTs came into
effect from 01/07/2017. It is submitted that the taxes which
were not there at the time of execution of Agreement or
issuance of the tender, the petitioner is not liable to pay such
taxes unless there is a specific condition in the tender
document. It is argued that, the Government vide
Government Circular dated 19/09/2017 and GR dated
21/01/2021, it has been clarified. It is argued that relying
upon aforementioned Circular and GR, the reimbursement of
GST was made in favour of many contractors like the
petitioner.
11. It is submitted that the respondents are harping
upon the pre-bid meeting, wherein while recording the
clarification to the query relating to all new taxes, it was
observed that the Clause in Bid Document will prevail. It
further states that all new taxes/charges in tax structure
including sales tax, service tax etc. after award of contract
shall be fully borne by the contractor and no reimbursement
shall be paid by N.I.T. It is submitted that even if this
6 911) WP 1867-23-J.odt
clarification is considered as a part and parcel of the tender
document, it goes contrary to the tender conditions. It is
submitted that clarification cannot go beyond the main
orders. For this purpose, the learned senior counsel for the
petitioner has placed reliance on the judgment in the case of
B. Rugmini Amma and anr. V/s. B.S.Nirmala Kumari and ors.
reported in (2013) 11 SCC 262.
12. On the other hand, Shri Kunte, the learned counsel
for the respondents argued that the claim of the petitioner
was rightly denied by the respondents for the reason that after
the pre-bid meeting and after recording the clarification that
the petitioner is liable to pay all new taxes and would not be
entitled for reimbursement, he should not have proceeded
with the execution of the contract, if such condition was not
acceptable to the petitioner.
13. It is further argued that there were numerous stages
when such objection could have been taken by the petitioner,
however, no such objection was taken and even after
7 911) WP 1867-23-J.odt
completion of work, he waited for long period. He, therefore,
submits that now, the petition cannot be permitted to blow
hot and cold at the same time.
14. Shri Kunte, learned counsel for the respondents
further draws our attention to the certain Clauses relating to
payment, which prohibits the contractor from claiming any
additional payment beyond the rates quoted.
15. He submits that it was made clear to the petitioner
that all the future taxes are to be paid by the petitioner and
since at the bottom of pre-bid meeting document, there is a
note stating that the said document is part and parcel of the
tender, the petitioner cannot claim reimbursement contrary to
the clarification recorded in the pre-bid meeting.
16. He further draws attention to Clause 48 on which
the reliance is placed while issuing the impugned
communication. The learned counsel for the respondents
placed emphasis on the expression used in the said Clause,
namely “No extra payment will be made to the contractor, as
the rates quoted by the contractor are inclusive of all
8 911) WP 1867-23-J.odt
applicable taxes, duties, levies, and service tax etc.” He,
therefore, submits that the petition needs to be dismissed.
17. Having heard the rival contentions and having gone
through the petition, it is evident that the work order was
issued to the petitioner on 25/08/2014. At the time of the
agreement of issuance of work order, tax namely GST was not
in existence. It was made applicable w.e.f. 01/07/2017, when
the work in question was ongoing.
18. Many contractors who were facing similar situation,
approached to the Government and raised the issue in respect
of applicability of GST to ongoing contract.
19. The Government thereupon issued a Circular dated
19/09/2017, which is clarificatory in nature in respect of
effect of Goods and Services Tax Act, 2017, clarifying that
extra burden of GST, if any, shall be compensated by the
Public Works Department upon production of authenticated
records of net extra burden on account of GST (after
deducting VAT and/or exercise as in earlier contract). It
further states that the claims to this effect shall be submitted
9 911) WP 1867-23-J.odt
by the contractors to the concerned Executive Engineer, who
will scrutinize and reimburse the claims within 30 days of
receipt of such claims.
20. Thereafter, the GR dated 21/01/2021 was issued,
which stipulates execution of supplementary agreement for
the ongoing work on 01/07/2017. Clause 2.3 of the GR dated
21/01/2021 reads thus,
“2.3. The total tax burden thus calculated
should be deducted from the contract price
remaining as on 01/07/2017 and a
supplementary agreement should be made for
the remaining net contract price (Net Contract
Price). The applicable Goods and Services Tax
(GST) should be paid on the said net contract
price.”
21. It is imperative to note that after this clarification,
reimbursement was made to many contractors like the
petitioner and even in the case of the petitioner when such
claim for GST reimbursement was made, the claim of the
petitioner was got verified from the CA.
22. The act of the respondents referring the claim of the
petitioner to the CA for verification itself shows that the
10 911) WP 1867-23-J.odt
respondent speaks volume.
23. Thus, once the respondent proceeded in the matter
to evaluate the claim of the petitioner and refer the
calculations made by the petitioner for verification to CA,
subsequently, after six months of such verification, denial of
the claim is arbitrary.
24. The Clauses which are relied upon by the
respondent are Clause 25 and 48, which read thus,
“25. The offer shall be inclusive of all taxes, octroi/LBT, cess,
royalty, service tax etc. to be paid by the tenderer for the work
and claims for payment on any such shall not be entitled.”
48. The rates to be quoted by the contractor must be
inclusive of all applicable taxes, duties, levies and service tax
etc. During contract period. No extra payment on this
account will be made to the contractor.”
25. If we see the language of Clauses 25 and 48, it is
evident that the contractor was to quote the rates inclusive of
all applicable taxes. This itself is sufficient to say that both the
Clauses do not speak about the taxes which would be made
applicable in future.
26. The taxes which are not recoverable by the
11 911) WP 1867-23-J.odt
Government from the contractors, on the date of tender,
cannot be the basis for quoting the rates while submitting the
bid.
27. Thus, we are of the considered view that if Clauses
25 and 48 are taken into consideration, the impugned order is
illegal and the respondents cannot deny the claim of the
petitioner for GST reimbursement on the basis of above
referred two Clauses.
28. Now, the question remains, whether in view of the
pre-bid meeting and the clarification recorded in that meeting
in respect of future taxes, the petitioner is liable to pay GST.
29. For this purpose, the judgment in the case of B.
Rugmini Amma and anr. (supra) is helpful which says that
effect of a clarification would not surpass the main order and
cannot, by any means, supersede or override the terms of the
main order.
30. Thus, it is evident that since the clarification as
recorded in the pre-bid meeting in the present case is contrary
12 911) WP 1867-23-J.odt
to the provisions of the tender, such clarification will not
supersede the conditions of tender.
31. Article 14 of the Constitution of India forbids the
Government and its authorities to act unfairly, arbitrary and
unreasonably. If it is the case of the respondents that except
the petitioner, all other contractors are entitled to claim GST
reimbursement and the petitioner cannot claim
reimbursement because of aforementioned clarification
recorded in the pre-bid meeting, it would be in violation of
Article 14 of the Constitution of India, as it will amount to
treating equals unequally.
32. Having held so, we pass the following order:-
ORDER
i) The Writ Petition is allowed.
ii) The impugned communication dated 20/12/2022 is
hereby quashed and set aside and consequently, we
hold the petitioner is entitled to claim GST
reimbursement as per the amount verified by the
Chartered Accountant of respondents, Rodi Dabir
13 911) WP 1867-23-J.odt
and Company by issuing certificate dated
28/06/2022.
iii) The amount shall be paid within a period of eight
weeks from today.
The Rule is made absolute accordingly. No order as
to costs.
(RAJ D. WAKODE, J.) (ANIL S. KILOR, J.)
Khapekar
Signed by: Mr. B.T. Khapekar
Designation: PA To Honourable Judge
Date: 22/07/2026 19:35:17
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