1. Introduction

1.1. Case Overview

The decision of the Madhya Pradesh High Court in Ojas Construction Through Its Partner Rachna Pathak v. The State Of Madhya Pradesh and Others, Writ Petition No. 39844 of 2025, decided on 17 November 2025 by a Division Bench at Jabalpur (Hon’ble Shri Justice Vivek Rusia, authoring, and Hon’ble Shri Justice Pradeep Mittal concurring), concerns a contractor’s claim for reimbursement of increased Goods and Services Tax (GST) in a public works contract.

The petitioner, a partnership firm executing a dam and canal construction project under the “Dharampura Jalashay Yojna”, sought a writ of mandamus for refund of additional GST at 6% (over and above 12%), allegedly borne and deposited by it after a change in GST rate. Central to the dispute is the interpretation and enforceability of a standard tax clause (Clause 25) in the construction contract and the maintainability of such a monetary claim under Article 226 of the Constitution.

1.2. Parties

• Petitioner: Ojas Construction, a partnership firm, acting through its partner, Ms. Rachna Pathak, a contractor engaged in civil works under a government scheme.
• Respondents: The State of Madhya Pradesh and other concerned governmental authorities, including Respondent No. 4 (likely the departmental authority administering the contract).

1.3. Factual Background

Key factual elements, as recorded in the judgment, are:

• The petitioner was awarded a contract for construction of a dam and canal under the Dharampura Jalashay Yojna. An agreement was executed on 17.08.2022.
• At the time of execution of the agreement, the court notes that the "applicable GST rate was 12%".
• The Central Government, by notification dated 18.07.2022, enhanced GST on the relevant works contract service from 12% to 18%.
• The petitioner claims to have borne and deposited the additional 6% GST and sought reimbursement from the State, asserting parity with similarly situated contractors.
• The petitioner addressed representations/ applications dated 08.04.2025 and 29.09.2025 to Respondent No. 4 seeking reimbursement, which remained undecided, prompting the writ petition.

1.4. Reliefs Sought

The petitioner prayed for the following principal reliefs:

• Mandamus for GST reimbursement: Direction to the respondents to reimburse/ refund additional GST @ 6% (beyond 12%) borne and deposited by the petitioner under Agreement No. 07/D.L./2022-23.
• Direction to decide representations: A writ commanding Respondent No. 4 to consider and decide the petitioner’s pending representations dated 08.04.2025 and 29.09.2025 and grant the reimbursement claim.
• General relief: Any other appropriate writ, order, or direction as deemed fit by the Court.

1.5. Core Legal Issues

The case essentially raised the following issues:

• Whether, on a proper reading of Clause 25 of the construction contract, the petitioner was contractually entitled to reimbursement of the increased GST.
• Whether such a claim, fundamentally arising out of a bipartite commercial contract, is enforceable through a writ petition under Article 226, particularly by seeking a writ of mandamus.
• Whether the High Court, in writ jurisdiction, can effectively rewrite or modify contractual terms to grant relief, particularly in the context of tax changes.

2. Summary of the Judgment

2.1. Contractual Clause at the Heart of the Dispute

The Court reproduces Clause 25 of the agreement, titled “Taxes”, which can be summarised as follows (with emphasis added where legally significant):

25.1 The rates quoted by the Contractor shall be deemed to be inclusive of the GST and other levies, duties, cess, toll, taxes of Central and State Governments, local bodies and authorities.

25.2 The liability, if any, on account of increase in all types of taxes GST, Income Tax, Labour Cess, royalties, all types of fees of Central and State Government, local bodies and authorities whatsoever on all works, contract services, labour, material and equipment that the contractor will procure for the performance of this contract, shall be borne by the contractor except GST.

25.3 If during the implementation of the contract, the rate of GST on works contract service is reduced from the prevailing rate (on the last date of submission of bid) then the difference of GST on work contracts service rates will be recovered from the date on which the reduction in GST rates shall be effective. If GST rates increases, the additional increased amount as per actual, will be paid to the agency.

25.4 Any changes in the taxes due to change in legislation or for any other reason shall not be payable to the contractor.

2.2. Court’s Key Observations

The Bench notes that Clause 25 comprehensively deals with taxes, including GST. It then briefly reasons:

• Clause 25.3 addresses the scenario of reduction and (textually) increase in GST rates during the implementation of the contract.
• The Court, however, states: “There is no agreement in respect of enhancement; there is a situation of enhancement of service tax in the agreement; therefore, the conditions enumerated in the bi-parte contract cannot be changed after awarding of the contract and during execution of the work.”
• From this, the Court draws the conclusion that the petitioner is not entitled to relief in writ jurisdiction and that the Court cannot alter or read into the terms of the bipartite contract.

2.3. Disposition

On this basis, the Court holds that:

• No case is made out for issuance of a writ. The petitioner’s request for reimbursement of additional GST and direction to decide its representations is declined.
• The proper course for the petitioner is to avail the remedy under the dispute resolution forum, i.e., the contractual mechanism (such as arbitration or a designated authority) or civil proceedings.
• The writ petition is dismissed.

3. Detailed Analysis

3.1. Contractual Framework: Dissecting Clause 25

3.1.1. Clause 25.1 – Inclusive Contract Rates

Clause 25.1 stipulates that the quoted rates are inclusive of GST and other taxes. This is standard in government works contracts: the bidder is expected to build tax incidence into the quoted price. Prima facie, this suggests that the contractor assumes the tax burden (at least at the time of bidding/execution).

3.1.2. Clause 25.2 – General Rule: Contractor Bears Increases, Except for GST

Clause 25.2 states that liability for increase in all types of taxes (GST, income tax, labour cess, royalties, fees, etc.) shall be borne by the contractor, except GST. This exception carves out a special treatment for GST, signalling that GST is subject to a separate adjustment mechanism (further elaborated in Clause 25.3).

3.1.3. Clause 25.3 – Specific Mechanism for GST Rate Changes

Clause 25.3 is crucial. It provides:

• If during contract implementation, the GST rate on works contract service decreases from the prevailing rate (on the last date of bid submission), the difference will be recovered from the contractor (i.e., the State benefits from reductions).
• If the GST rate increases, then the additional increased amount “as per actual” will be paid to the agency (contractor) (i.e., the contractor is compensated for increases).

On its face, this clause appears to fully neutralise GST fluctuations for both sides: the State receives the benefit of tax reductions; the contractor receives the benefit of tax increases. The key interpretative questions would have been:

• What was the “prevailing rate on the last date of submission of bid”?
• Whether the GST increase from 12% to 18% (by notification dated 18.07.2022) fell within the temporal and substantive scope of Clause 25.3.

3.1.4. Clause 25.4 – No Relief for Other Tax Changes

Clause 25.4 provides that any changes in taxes due to legislative change or any other reason shall not be payable to the contractor. Read harmoniously, Clause 25.4 seems to apply to taxes other than GST, given that GST is explicitly dealt with in 25.2 and 25.3.

Thus, overall, Clause 25 appears to:

• Make the contract price inclusive of all taxes (25.1);
• Place tax increases generally on the contractor, except GST (25.2);
• Provide a specific adjustment mechanism for GST changes (25.3);
• Bar reimbursement for other tax changes (25.4).

3.2. Core Legal Questions Framed by the Judgment

The judgment, albeit brief, implicitly addressed three interrelated legal questions:

• Entitlement Question: Does Clause 25 confer a clear contractual entitlement to GST reimbursement on the facts pleaded, especially where notification and agreement dates appear close or overlapping?
• Jurisdictional Question: Even if an entitlement arguably arises under the contract, can the High Court enforce this purely contractual monetary claim through a writ of mandamus?
• Modification Question: Can the Court, in writ jurisdiction, modify, supplement, or rewrite terms of a bipartite contract to grant monetary relief?

3.3. The Court’s Legal Reasoning

3.3.1. Primacy of Contractual Terms

The Bench underscores that the rights and obligations between the parties are governed by the express terms of the contract, particularly Clause 25. It effectively treats the contract as the sole source of rights regarding tax adjustment.

The Court’s observation:

“There is no agreement in respect of enhancement; there is a situation of enhancement of service tax in the agreement; therefore, the conditions enumerated in the bi-parte contract cannot be changed after awarding of the contract and during execution of the work.”

This sentence is slightly opaque, and arguably internally inconsistent, because:

• On a literal reading, Clause 25.3 does speak of “If GST rates increases… additional increased amount… will be paid to the agency”.
• The Court nonetheless states “there is no agreement in respect of enhancement”, which may mean:
  • Either that the particular increase now claimed does not fall within the intended scope of Clause 25.3 (for instance, it may have taken effect before the “implementation” period or before the tender’s base date), or
  • The Court is indicating that any new entitlement outside the clear text of the clause cannot be read into the contract.

Importantly, the Court does not engage in a detailed interpretive exercise of Clause 25.3. Instead, it uses the existence of a detailed tax clause to emphasise that:

• Contractual allocation of tax risk has been consciously negotiated; and
• Courts in writ jurisdiction should not disturb or reformulate such allocation.

3.3.2. Limited Scope of Writ Jurisdiction in Contractual/Monetary Disputes

The Court then draws the crucial jurisdictional line: it declines to exercise writ jurisdiction to adjudicate or enforce what is essentially a contractual monetary claim. Two aspects are central:

• The claim for reimbursement of additional GST arises from the terms of a bipartite commercial contract.
• Such a claim typically requires:
  • Interpretation of the contract,
  • Possibly, examination of bid dates, notification dates, and execution dates, and
  • Computation of amounts allegedly paid.

These are not ordinarily matters for summary adjudication in writ jurisdiction, especially where the State is acting in its commercial capacity, and where a specific dispute resolution mechanism exists under the contract.

3.3.3. Deference to Contractual Dispute Resolution Forum

The Court concludes by explicitly directing the petitioner to approach the “dispute resolution forum”, indicating:

• The contract presumably contains a dispute resolution clause (such as arbitration or an adjudicatory authority).
• That forum is the appropriate mechanism to:
  • Interpret Clause 25 in detail,
  • Determine factual disputes relating to dates, payments, and calculations, and
  • Grant any monetary relief if due.
• A writ court will not displace that mechanism for a purely monetary/contractual claim.

3.4. Precedents and Jurisprudential Context

3.4.1. Absence of Explicit Case Law Citations in the Judgment

The written order, as provided, does not cite any judicial precedents by name. It relies on first-principles reasoning: primacy of contract and limitations of writ jurisdiction in commercial matters.

However, the reasoning aligns closely with well-established principles laid down by the Supreme Court of India and repeatedly followed by High Courts. While these were not expressly mentioned in the judgment, they provide the wider doctrinal backdrop.

3.4.2. Supreme Court on Writs in Contractual Matters (Contextual Overview)

The following strands of doctrine are relevant for contextual understanding (not as citations used in this particular judgment, but as the background law):

• Limited judicial review of contracts under Article 226: The Supreme Court has consistently held that while Article 226 can be invoked even in contractual matters, it is ordinarily limited to examining:
  • Whether the State’s action is arbitrary, irrational, discriminatory, or mala fide, particularly at the stage of awarding or cancelling contracts.
  • Whether the action infringes constitutional or statutory rights, distinct from purely contractual entitlements.
• Monetary claims and contractual disputes: Purely monetary claims grounded in contract—especially where serious factual and interpretative questions arise—are generally held to be unsuited for determination under Article 226, as they:
  • Require evidence,
  • Entail detailed contract interpretation, and
  • Are better addressed through civil suits or arbitration.
• Non-rewriting of contracts: Courts have emphasised that contracts—especially commercial contracts—cannot be restructured by judicial fiat. If parties have consciously allocated tax risks within a contract, courts will generally give effect to that allocation, not override it on equitable grounds.

3.4.3. GST Escalation and Public Works Contracts – Emerging Pattern

Post-GST, public works contracts often contain detailed clauses on how GST changes will be dealt with. Many High Courts (and arbitration tribunals) have been called upon to decide:

• Whether contractors are entitled to reimbursement of higher GST rates where:
  • The tender was floated before GST structuring or before a change in rate, but
  • The contract was executed after a rate change or during GST transition.
• How to interpret “prevailing rate” or “base date” clauses in price adjustment provisions.
• The interaction between generic “all-inclusive rates” clauses and specific tax adjustment provisions.

The High Court’s approach here is consistent with a cautious judicial attitude: when a contract itself provides a detailed mechanism for dealing with tax changes, disputes over its application should be taken to the contractual forum, not to the writ court.

3.5. Assessment of the Court’s Approach

3.5.1. Strengths of the Judgment

The judgment, though terse, has several doctrinal strengths:

• It reaffirms the boundary between contractual remedies and writ remedies. The petitioner’s claim is plainly contractual and monetary; the Bench correctly steers it towards the dispute resolution mechanism.
• It upholds the principle that courts should not rework commercial bargains. Parties are bound by the tax clauses they agreed to; the Court refuses to create new obligations (for GST reimbursement) where the contract, on its reading, does not clearly support such relief in writ jurisdiction.
• It implicitly discourages the use of Article 226 as a shortcut for avoiding arbitration or civil litigation in public works disputes, especially for complex monetary claims.

3.5.2. Areas of Ambiguity and Possible Critique

Some aspects are less clear and raise interpretive issues:

• Internal inconsistency regarding enhancement clause: The text of Clause 25.3, as reproduced, expressly provides for payment of the additional increased GST to the contractor. Yet the Court states “There is no agreement in respect of enhancement”. This may indicate:
  • A possible drafting or transcription error in the order or agreement as quoted; or
  • The Court’s view that the specific situation pleaded (notification dated 18.07.2022 vis-à-vis execution date 17.08.2022 and bid date) does not fall within the “during implementation” increase contemplated by Clause 25.3.
• Chronology discrepancy: The judgment notes that:
  • At the time of agreement (17.08.2022), GST was 12%, and
  • The Central Government enhanced GST from 12% to 18% by notification dated 18.07.2022.

  Since 18.07.2022 predates 17.08.2022, this chronology appears counter-intuitive. It is possible that:

  • The relevant date under the contract is not the agreement date but the “last date of submission of bid”, which might have preceded the notification; or
  • There is a factual misstatement or incomplete record in the brief order.

  In any event, the Court does not explore this factual nuance; it simply declines to delve into such questions in writ jurisdiction.

• Parity with other contractors: The petitioner invoked “parity with other similarly situated contractors”. The order does not address:
  • Whether any other contractors under the same department and scheme were granted GST reimbursement, or
  • Whether a claim of discrimination under Article 14 could arise if State practice was selectively favourable to some contractors.

  The silence suggests that such parity assertions were either unsubstantiated on record or were viewed as inseparable from the contractual claim, again better left to fact-finding before the dispute forum.

3.6. Impact and Future Implications

3.6.1. For Contractors in Public Works

The decision carries practical implications for contractors:

• Careful reading of tax clauses: Contractors must scrutinise clauses like Clause 25 at the bidding stage to understand:
  • Who bears tax increases (general rule vs GST-specific rule), and
  • What base dates (bid date, agreement date, etc.) govern tax adjustments.
• Choice of forum: Claims for reimbursement of enhanced GST are likely to be treated as contractual disputes requiring recourse to arbitration or other agreed mechanisms, not writ petitions.
• Limited writ remedy for monetary relief: Even if a contractor believes the department has clearly breached an unambiguous tax clause, courts may still insist on using the contractual forum if:
  • The matter involves quantification of monetary claims;
  • There may be factual disputes; or
  • The State is not shown to have acted arbitrarily in a public law sense.

3.6.2. For Government Departments and Drafting of Contracts

For the State and its agencies:

• Enforceability of tax risk allocation: The judgment implicitly endorses the enforceability of detailed tax allocation clauses. Departments can rely on such clauses to resist writ-based challenges.
• Need for clarity: Ambiguous or internally inconsistent wording within tax clauses (e.g., overlapping provisions on all-inclusive rates and separate adjustment for GST) can still spawn litigation. Clear drafting that unambiguously states:
  • Base dates for tax rates,
  • Scope and timing of adjustments, and
  • Differences between GST and other taxes,
  can reduce disputes.
• Standardisation and consistency: If departments choose to grant GST reimbursement in some contracts but not others, the risk of Article 14 challenges remains. Consistent policy and contract drafting across projects can mitigate this.

3.6.3. For Future Litigation Strategy

Litigants and counsel should note:

• Writ petitions for contract-based tax reimbursement are likely to face maintainability objections, especially when:
  • A dispute resolution clause exists, and
  • The claim is purely monetary and interpretative.
• Writ jurisdiction remains viable in contract matters primarily where:
  • The challenge is to award, cancellation, or blacklisting on grounds of arbitrariness or illegality; or
  • There is a clear statutory or constitutional infraction over and above contract terms.
• For GST escalation issues, arbitration or civil suits remain the principal vehicles for seeking relief, especially where the contractual text is detailed and contested.

4. Complex Concepts Simplified

4.1. GST and Works Contract Services

GST (Goods and Services Tax) is a comprehensive indirect tax levied on the supply of goods and services in India. A works contract (like construction of a dam and canal) is treated as a supply of services under GST.

Government contracts typically specify:

• The GST rate applicable on the base date (e.g., 12%);
• How future changes in GST (increase or decrease) during the execution period will be handled (e.g., reimbursement or recovery clauses).

When GST rates change (e.g., from 12% to 18%), disputes arise as to who bears the difference: the contractor or the State, and whether the contract provides for adjustment.

4.2. Writ Petition and Mandamus

A writ petition under Article 226 is a constitutional remedy by which a High Court can issue directions, orders, or writs (including mandamus, certiorari, prohibition, etc.) to any person or authority, including the government.

A writ of mandamus is used to:

• Compel a public authority to perform a public duty imposed by law (statute, constitutional mandate, or sometimes binding rules and orders).
• It is not normally issued to enforce purely private contractual obligations, unless the contract is intertwined with public law duties or statutory obligations.

In this case, the petitioner sought mandamus to compel reimbursement of GST based on a contractual clause, which the Court treated as a private law claim unsuited to writ jurisdiction.

4.3. Dispute Resolution Forum in Contracts

Major government contracts typically include a dispute resolution clause, which may provide for:

• Arbitration, under the Arbitration and Conciliation Act, 1996;
• A departmental authority (e.g., Chief Engineer or a designated committee) to decide disputes, sometimes followed by arbitration;
• Civil suit in courts if arbitration is excluded.

When courts say “avail remedy under the dispute resolution forum”, they mean:

• Follow the mechanism agreed in the contract to resolve disputes; and
• Use constitutional remedies (writs) only where something more than a mere contractual disagreement is at stake.

4.4. Tax Escalation Clauses

Tax escalation clauses specify how tax changes during the life of a contract will be handled. They typically:

• Identify a base tax rate and date (e.g., GST at 12% on the last date of bid submission);
• Provide that if tax increases, the employer (State) will:
  • Pay the additional amount to the contractor; or
  • Share it in a specified ratio; or
  • Not pay at all (contractor bears it) – depending on what is agreed.
• Provide that if tax decreases, the employer will recover or adjust the benefit from the contractor.

In this case, Clause 25.3 is such an escalation clause specifically for GST on works contract services.

5. Conclusion

The decision in Ojas Construction v. State of Madhya Pradesh reinforces an important boundary in Indian public law: writ jurisdiction under Article 226 is not a vehicle for litigating complex, purely contractual monetary disputes, even when one party is the State.

By focusing on Clause 25 of the contract and emphasising the need to respect the contractual allocation of tax risk, the Madhya Pradesh High Court:

• Declines to convert a GST escalation dispute into a public law matter amenable to mandamus;
• Reaffirms that dispute resolution clauses in contracts must be honoured, and that contract-based claims should proceed through arbitration or civil proceedings; and
• Signals to both contractors and the State that clarity and precision in drafting tax clauses are crucial, as courts will be slow to intervene to alter or expand them under writ jurisdiction.

While the order leaves some factual and interpretive questions unresolved (such as the exact chronology and the precise scope of the enhancement clause in 25.3), it is significant for its reaffirmation of a core constitutional principle: public law remedies cannot routinely be used to bypass or supplant the contractually agreed mechanisms for resolving commercial disputes with the State, even when those disputes involve taxation and GST.

In future GST escalation cases under public works contracts, this judgment will likely be cited to support objections to the maintainability of writ petitions and to steer parties towards the dispute resolution forums they themselves agreed to when entering into the contract.