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2025 Supreme(Online)(Kar) 24107
KARNATAKA HIGH COURT
M. Nagaprasanna, J
M/S Apoorva Construction Co. – Appellant
Versus
State of Karnataka Department of Finance – Respondent
Writ Petition No. 28 of 2024 (GM-RES)
For the Appellants/Petitioners: Sri D.R. Ravishankar, Sri Naveen G.S.
For the Respondents: Sri M. Rajakumar, Sri K.S. Naveen Kumar, Sri Anil Kumar B., Sri G. Lakshmeesh Rao
Contractors are entitled to refund of differential GST amounts paid for work executed under KVAT regime prior to GST implementation, with clear guidelines for assessment of claims under applicable circulars.
Headnote:(A) Constitution of India - Article 226 - Goods and Services Tax (GST) - Refund claim for differential GST amount paid by contractors for works executed under KVAT regime, as clarified in Circulars dated 03.01.2020 and 14.12.2020 - Petitioner seeking refund based on contracts entered before GST implementation - Court directed appropriate authorities to assess and reimburse differential GST amount based on calculations mentioned - Respondent required to adhere to circulars and provide relief expeditiously. (Paras 1-30)
Facts of the case:
The petitioners, being contractors, represented for the refund of differential GST paid for works completed both pre and post-GST regime, with specific references to contracts entered pre-01.07.2017 but executed post-GST, seeking reimbursement established under the clarified framework of the Karnataka Finance Department Circulars.
Findings of Court:
The Court reiterated that the works executed and the tax implications based on the applicable law should be computed based on the circulars issued, ensuring statutory payments are honored by the State.
Issues: The primary issue before the Court concerned the entitlement of contractors to seek refunds for GST over and above what was anticipated based on contracts executed before the GST regime.
Ratio Decidendi: The Court emphasized that the differential tax liability arising from the transition from the KVAT regime to GST needed to be calculated separately for each contract with a clear inference that the State must adjudicate and resolve these claims based on the established circulars to ensure prompt compliance.
Result: Writ petitions disposed of with directions for calculations and reimbursements.
| Table of Content |
|---|
| 1. petitioner seeks gst refund. (Para 1) |
| 2. parties dispute applicable tax rates. (Para 2 , 3 , 4 , 5 , 6) |
| 3. court examines prior judgments and circulars. (Para 7 , 8 , 9 , 10 , 11) |
ORAL ORDER
The petitioner is before this court seeking the following prayers:
"(a) Issue a writ or such other order in the nature of Mandamus directing the Respondents to refund the differential GST amount paid by the petitioners for the works executed by each of the petitioners respectively, as per the representations dated 02.08.2022, 16.06.2023, 17.06.2023, 20.09.2023 and 30.09.2023 etc., given by the petitioners - contractors to respective respondent - employers (as per the abstract Annexed) and produced at Annexure - B to B4.
(b) Issue a writ or such other order directing the Respondent No.1 - State Govt, to issue a circular/policy to address the issue of payment of GST on works contract which are executed under VAT regime or under old schedule of rates wherein GST is not paid by the Respondent - employers but is levied and paid by the petitioner - contractors to the GST department.
(c) Pass such other orders as may be deemed appropriate under the circumstances of the case, in the ends of justice."
2. Heard Shri D.R. Ravishankar, learned Senior counsel for Shri Naveen G.S., learned counsel appearing for the petitioner; Shri M. Rajakumar, learned Additional Government Advocate appearing for respondents No.1 and 2; Shri K.S. Naveen Kumar, learned counsel appearing for respondent No.3; Shri Anil Kumar B., learned counsel appearing for respondent No.4 and Shri G. Lakshmeesh Rao, learned counsel appearing for respondents No.6 and 8.
3. The issue in the lis is with regard to refund of GST. The controversy is, what schedule of rates is made applicable in the contracts entered into between the petitioner and the statutory departments.
4. The learned Senior counsel appearing for the petitioner submits that the contracts though were entered into at a later point in time i.e., after the regime of the GST, they were at the old scheduled rates under the KVAT regime, which is disputed by the respondents contending that the schedule of rates were changed in February-2018 and therefore, the contract was entered into after the change in schedule of rates, in some of the cases, at least.
5. The learned counsel appearing for the respondents would submit that the petitioner has no right to seek refund on the strength of what is projected before the court.
6. The learned Senior counsel would now submit that the co-ordinate bench has considered every argument of these respondents and has passed a detailed order.
7. The co-ordinate bench in WP.No.9721/2019 c/w others disposed on 11.04.2023 has held as follows:
"11. It is an undisputed fact that the Petitioners herein are class-I contractors who have entered into 'works contract with various State Govt agencies and that the agreements were entered into at a point of time when the KVAT Act and Finance Act 1994 were in force It is also not in dispute that the Petitioners are either covered under Composition scheme or regular VAT assessment and that on 01.07.2017 when the GST Act was implemented pan India, the sad works contract was treated as "deemed service" and the Petitioners became liable to pay GST. It is this differential tax amount arising out of change in tax regime from VAT to GST which cast a additional tax burden on the Petitioners, which is the subject matter of the present petitions.
12. Before adverting to the rival contentions, it is necessary to refer to the State Government Circular dated 03.01.2020, which reads as under:-
"With reference to the above, your request for clarification on Tax calculation for the pre- GST period and post-GST period in the ruining bills of works has been examined by the GM (PF), KUIDFC and has suggested the following procedure for calculating Taxes for pre-GST period and post-CST period as follows:
1. Calculate the balance works to be completed in the original contact.
2. De
