The court ruled that GST does not apply to works contracts completed before 01.07.2017, directing a review of tax liabilities on such contracts and clarifying reimbursement obligations for differential tax burdens. All claims must now be reassessed against the determined tax discrepancies.

ORDER :

(PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA)

1. The petitioner is before this Court seeking the following prayer:

“I. The Petitioner most respectfully prays that this Hon’ble High Court may be pleased to issue a Writ of Certiorari or a direction in the nature of a Writ quashing the impugned adjudication order bearing no.CTO/LGSTO-310/ORDER-74/50/2024-25/B-

5458, dated 04.02.2025, for the period 2017-2018 (vide Annexure-B) passed by the respondent No.1 II. Pass such other Order or further Orders as this Hon’ble Court may deems fit in the facts and circumstances of this case, in the interest of justice and equity.

III. This Hon’ble High Court may be pleased to issue such other writ or writs or directions in the nature of a writ as this Hon’ble High Court may deem it fit to grant in the facts and circumstances of the petitioner’s case.”

2. Heard the learned counsel Shri H.R. Kambiyavar appearing for the petitioner; learned AGA Shri T.Hanumareddy appearing for respondent Nos.1 to 4; and learned counsel Shri M.B. Kanavi appearing for respondent No.5.

3. Learned counsel appearing for the parties in unison would submit that, the issue in the lis stands covered by judgment rendered by Coordinate Bench of this Court in W.P. No.9721 of 2019 and connected matters, disposed off on 11^th April 2023. The Coordinate Bench of this Court held as follows:

“Since common questions of law and fact arise for consideration in all these petitions, they are taken up for consideration together and disposed of by this common order. Further, since identical relief’s are sought for in the petitions, for the purpose of convenience, the relief’s sought for in W.P.9721/2019 is reproduced as under;-

(a) Declare that the provisions of GST Act is inapplicable in respect of works contract where ‘provisions of service’ are made prior to 01.07.2017 in so far as petitioners are concerned and consequently that the respondent Nos 4 to 8 have no jurisdiction to either issue notice or to take any coercive steps against the Petitioners under the provisions of the GST Act dated 01.07.2017 produced as Annexure-H ;

(b) Declare that the provisions of Section 7 (3) read with clause 6 of Schedule II of the GST Act is ultra-vires Article 366 (12A), (26A) (29A) (b) & (f) the Constitution in view of and settled principles of law laid down by the Hon’ble Supreme Court regarding “works contract” and consequently that the respondent Nos. 4 to 8 have no jurisdiction to either issue notice or to take any coercive steps against the Petitioners under the provisions of the GST Act for “works contract” entered into post 01.07.2017 ie after the GST Act came into effect which is produced as Annexure H; and

(c) Direct the respondent No. 1 to consider the representations as per Annexure – C- 1, Annexure-C-2 and Annexure- C-3 all dated 24.11.2018 in tandem with Annexures – D, E1 to E6; and

(d) Pass such other orders as may be deemed appropriate under the circumstances of the case, in the ends of justice.

2. The main issue involved in these petitions arises out of the grievance of the Petitioners that in view of the introduction of GST w.e.f 01.07.2017, the Petitioners who have earlier entered into “Works Contract” and had been assessed during the pre-GST regime either under the Composition scheme (COT scheme) or regular VAT assessment scheme( for short ‘the VAT scheme’) under the Karnataka Value Added Tax Act, 2003 ( for short ‘the KVAT Act’) are required and made liable to pay additional tax by way of GST after 01.07.2017, which is a huge differential tax burden not envisaged at the time of entering into agreements under the COT/KVAT schemes during the KVAT regime and as such, petitioners are before this Court by way of these petitions.

3. The Petitioners herein are class-I contractors who have entered into ‘works contract’ with various State Govt agen