Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC

The Jaipur Bench of Rajasthan High Court has held that the denial of gst rate revision benefit to contractor violates Article 14 of the Constitution of India. The bench of Justice Ganesh Ram Meena has directed the department to make refund of the differential amount of the GST i.e. 6% to the petitioner, which shall be effective from the revision of the GST Rate within 30 days from the date of submitting the certified copy of this order. The petitioner shall also be paid interest on due amount @ 6% per annum from the date when he first submitted its claim to the respondent- Rajasthan State Road Development and Construction Corporation Limited (RSRDCC) i.e. 20.01.2022 The case arose from a writ petition filed by M/s N.G. Gadhiya, a contractor engaged by the Rajasthan State Road Development and Construction Corporation Limited (RSRDCC) for construction of a “Centre for Excellence for Revenue, Research & Analysis” in Jaipur. At the time of issuance of the work order in October 2021, the applicable GST rate was 12%. However, during the course of execution, the rate was increased to 18%. The contractor sought refund of the additional 6% GST burden, relying on a Finance Department order dated 07.01.2021 and subsequent circular dated 02.07.2024. Despite representations, the RSRDCC rejected the claim citing contractual provisions, particularly Clause 45.1 of the agreement, prompting the contractor to approach the High Court under Article 226 of the Constitution. The Court framed critical questions for determination: Whether writ jurisdiction is maintainable in contractual disputes involving State entities? Whether Finance Department orders and amendments apply to RSRDCC? Whether denial of GST differential refund is discriminatory and violative of Article 14? Whether the contractor is entitled to refund of the additional 6% GST? The Court reiterated that merely because a dispute arises out of a contract, it does not bar invocation of writ jurisdiction, especially when the State or its instrumentalities are involved. Relying on landmark rulings including ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. and Godrej Sara Lee Ltd. v. Excise and Taxation Officer, the Court emphasized that state actions must satisfy the test of fairness under Article 14. Writ petitions are maintainable where arbitrariness or discrimination is alleged. Availability of alternate remedies is not an absolute bar The Court held that the present case involved interpretation of statutory rules and public law elements, making it fit for adjudication under writ jurisdiction. The Court noted that RSRDCC is a government-controlled entity: funded and administratively controlled by the Government of Rajasthan; board of Directors comprises senior government officials; and project funding sourced from the State budget Accordingly, the Court observed that RSRDCC qualifies as a “State” under Article 12 and is bound by constitutional obligations of fairness and non-arbitrariness. The Court examined contractual clauses and found that the agreement explicitly incorporated circulars and rules issued by the Finance Department. Public Works Financial & Accounts Rules were applicable to the contract. Clause 36E (introduced via order dated 07.01.2021) specifically addressed GST rate revisions The Court acknowledged that such differential treatment, if established, could amount to discrimination and violation of Article 14 of the Constitution. Case Details Case Title: M/s N.G. Gadhiya Versus State Of Rajasthan Citation: JURISHOUR-544-HC-2026(RAJ) Case No.: S.B. Civil Writ Petition No. 16435/2024 Date: 25/03/2026 Counsel For Petitioner: Major R.P. Singh, Senior Advocate Counsel For Respondent: P.C. Jain Click Here To Read Order Read More: Hyderabad Customs Commissionerate | Telangana High Court Relaxes Bail Condition Requiring Periodic Police Appearance in Customs Case

Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC

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