HC Denies GST Benefit on Pre-GST Auction, Upholds Contractual Tax Liability

The petitioner, Purushottam Jairam & Company, participated in e-auctions conducted in April and May 2017 for the purchase of timber logs. As per the auction terms, the bidder was required to pay 1/4th of the sale price along with applicable taxes within a stipulated time and the balance, along with sales tax and forest development tax, within 60 days, extendable with interest.

The petitioner paid the initial amount but failed to pay the remaining dues within the prescribed period. With the introduction of GST laws from 01.07.2017, the petitioner sought to pay the balance amount under the GST regime instead of the earlier tax laws. The authorities rejected this request and demanded payment as per the pre-GST tax regime along with interest for delay.

Main Issue: Whether GST provisions apply to payments made after 01.07.2017 pursuant to an auction sale concluded prior to GST implementation

HC Decided: The High Court dismissed the petition, holding that the sale was completed on the date of the auction itself and the tax liability stood crystallized under the laws prevailing at that time. It ruled that the petitioner was bound by the terms of the auction contract, which clearly stipulated payment of taxes under the existing regime along with interest for delayed payment.

The Court clarified that delayed payment does not shift the tax liability to the GST regime. It further held that transitional provisions under GST and Section 64-A of the Sale of Goods Act would not override specific contractual terms agreed between the parties.

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