Coimbatore: In a landmark verdict ruling, the Madras High Court has directed the State Highway Department to pay an 18 percent Goods and Services Tax (GST) to KCP Infra Limited for all its contract works in the highway sector.

Last year, the GST council raised the GST tax for road works from 12 percent to 18 percent, with the implementation date set as July 18. However, despite this change, the State Highway Department continued to pay contractors for their works at the lower rate of 12 percent as GST charges.

In response to this issue, KCP Infra Limited filed a case (Case No. W.P.No.21533 of 2023) against the State Highway Department in the Madras High Court, demanding payment of GST at 18 percent for all projects undertaken by them from July 18, 2022, onwards.

On July 20, 2023, Hon’ble Justice Saravanan presided over the case, meticulously evaluating the presented evidence and arguments. Subsequently, the court ruled in favor of KCP Infra, ordering the State Highway Department to revise the GST percentage and ensure the correct GST payments are made for works carried out since July 18, 2022.

The State Highway Department has been granted a 45-day timeframe by the court from the date of the judgment to comply with the court’s ruling. Failure to meet this deadline may result in legal consequences and penalties for the Highways Department.

This landmark decision by the Madras High Court could set a precedent for other similar cases involving GST disputes. The ruling emphasizes the importance of adhering to tax regulations and ensuring accurate payment of GST for businesses engaged in road contract works in the highway sectors.