In a recent ruling, the Allahabad High Court determined that the Goods and Services Tax (GST) cannot be imposed on payments received after the GST's implementation for work completed entirely during the pre-GST era. This decision came in the case of M/s Vimlesh Kumar Contractor versus the State of Uttar Pradesh and others, where the petitioner, a registered works contractor, had executed projects for U.P. Jal Nigam during the fiscal years 2015–16 and 2016–17, which were under the VAT regime. However, payments for these projects were only released in the fiscal year 2018–19, after the GST had been enacted.
The tax department issued a notice under Section 73, alleging a mismatch between the GSTR-3B and Form 26AS, considering the delayed payments as turnover during the GST period. The notice was uploaded in a manner that the petitioner did not view, resulting in an ex parte assessment order. Despite certificates from Jal Nigam confirming that the work was completed before the GST period, the appeal was dismissed.
Read More: GST – Allahabad High Court: Confiscation of goods and vehicle is illegal merely for violation of Section 35 (non-maintenance of accounts); tax liability must first be determined under Sections 73/74 [Order attached]
The court addressed whether payments received post-GST for pre-GST work could be treated as GST-period supplies under Section 73 proceedings. It ruled that the taxable event was the execution of the work, not the payment timing, and since the work was done under the VAT regime, GST could not be levied. The court quashed the assessment and appellate orders, deeming them illegal and beyond jurisdiction, and ordered a refund of any deposits made by the petitioner, with statutory interest, within a month.
Order Date: 17 November 2025
Case Title: M/s Vimlesh Kumar Contractor v. State of U.P. & Ors.
Facts
- The petitioner is a registered works contractor executing projects for U.P. Jal Nigam.
- All work was executed during FY 2015–16 and 2016–17, i.e., under the pre-GST VAT regime. Payments were, however, released during FY 2018–19, after GST came into force.
- The department issued a Section 73 notice alleging mismatch between GSTR-3B and Form 26AS, treating delayed payments as GST-period turnover.
- The notice was uploaded under the “additional notice” tab, which the petitioner did not view; thus an ex parte assessment order was passed.
- Despite certificates from Jal Nigam confirming work was pre-GST, the appeal was rejected.
Issue
- Whether payments received after GST implementation for works executed before 01.07.2017 can be treated as GST-period supplies for the purpose of Section 73 proceedings?
Order
- The Court held that the taxable event was the execution of works, not the timing of payment, and since the entire work was done under the VAT regime, no GST could be levied.
- Mismatch with Form 26AS cannot override the undisputed evidence that the supplies belonged to the pre-GST period.
- The Court found the assessment and appellate orders to be illegal and without jurisdiction.
- The orders dated 28.04.2024 and 21.01.2025 were quashed. Any deposit made by the petitioner must be refunded with statutory interest within one month. Writ petition allowed.
