Punjab & Haryana High Court Directs Review of Contractor’s Claim for 18% GST Reimbursement

The Punjab and Haryana High Court at Chandigarh presided over by Justice Jagmohan Bansal, delivered. The petitioner named Jai Prakash Garg a government Contractor approaches The High Court under Articles 226 and 227 of the Constitution of India seeking direction to the state of Haryana to reimburse GST at 18% on the work executed instead of restricting it to 12%. Relying on policy instruction and notification dated 1 Jan 2023 and subsequent Letters issued by the Finance Department on 14 Feb 2023. The petitioner also sought direction for the respondent to direct its legal Notice dated 25 March 2026.

The background of the dispute was The Petitioner had been declared the successful bidder in the tender dated 29.09.2023 and was allotted work. While executing the contract, the petitioner was reimbursed GST at 12% only which it was contrary to the revised policy the Grievance was raised on the Haryana Engineering Porter, but the respondent reply that the tender was based on the Old Haryana Statute of Rates where GST was already included in the rates. The petitioner issued a legal notice but received no relief leading to the writ petition.

The petitioner’s counsel maintained at the hearing that the government’s own stipulation required an 18% reimbursement rate, which the petitioner argued was arbitrary, as opposed to only 12% as allowed. The State counsel requested that the competent authority consider whether the petitioner was entitled to receive reimbursement at 18% or 12%, noting that the tender followed the old HRS and therefore warranted examination.

The submissions in its record, the Court did not give a mandamus directly but followed on from the assurance by State counsel. The directive that “if it is established that the petitioner has been provided GST @18%, the differential amount be released in his favour” was given to dispose of the petition. It is important because GST reimbursement conflicts are common for contractors when state departments rely on antiquated schedules or muddle up policy directions. It makes clear how policy directions are important in making contractual entitlements and the Court’s balanced approach towards contractual disputes.

It also highlights a matter of fairness in the contracts of  the Government, the principle of how contractors will get paid in accordance with prevailing policies because clarity in the application of tax-related policies is essential to avoid unnecessary litigation. On the whole, the Mr Jai Parkash Garg Contractor v. State of Haryana decision is a pragmatic approach to justice and judicial judgement, ensuring justice without exceeding judicial authority and the government’s power of Judgement.

It encourages contractors to stay on the lookout for changes in policy and fight the government to do the right thing when discrepancies occur, while also reminding all government authorities of their responsibility not to make policies just so and give those policies and guidelines justifiability. This one, despite being dismissed without a detailed decision, shows that entitlement must be considered properly, and contractors must not be disadvantaged because of incompetence, an axiom made in this case.

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