Contractors are entitled to reimbursement of differential taxes arising from the transition from VAT to GST based on previous agreements, ensuring compliance with both existing guidelines and timelines for claims.

ORDER :

M. Nagaprasanna, J.

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

“i. Issue a writ of mandamus directing the respondents No.5 to 23 to the petitioner a sum of Rs.3,34,62,072.50/- (Rupees three crores thirty- four lakhs sixty-two thousand and seventy-two and paise fifty only) towards the applicable GST payable by the respondent authorities as detailed by the petitioner in representations dated 26.12.2019 vide Annexure-D to D17 along with the accrued interest and penalty if any.

ii. Issue a writ of mandamus directing the respondents No.5 to 23 to the petitioner a sum of Rs.43,34,555/- (Rupees forty three lakhs thirty four thousand five hundred and fifty five only) towards the applicable vat payable by the respondent authorities as per the assessment order passed by respondent no.4 dated 12.11.2019 bearing No.DCCT/Audit-1/HBL/19-20/B vide Annexure-B and the accrued interest and penalty if any.

iii. Issue a writ of mandamus directing respondent No.4 from exempting the petitioner from either filing the monthly GST returns or paying the applicable GST thereon pending payment from the concerned authorities as per the representation dated 26.12.2019 vide Annexure-F.

iv. Issue a writ of mandmaus directing respondent No.4 to no to take any precipitative actions against the petitioners pending receipt of payment from respondent No.5 to 23 authorities pursuant to the assessment order passed by respondent No.4 dated 12.11.2019 bearing No.DCCT/Audit-1/HBL/19-20/b vide Annexure-B.

V. Pass any other orders as this Hon’ble Court may deem fit in the interests of justice and equity.”

2. The prayer of the petitioners sought is akin to what is decided by the Co-ordinate Bench of this Court in Writ Petition No.9721 of 2019 and connected cases disposed on 11.04.2023. The Co-ordinate Bench 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 said 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 an 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 running 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 contract.

2. Derive the rate of materials, KVAT items required to complete the balance works.

3. Deduct the "KVAT" amount from those materials and the service tax also.

4. Add the applicable "GST" on those items.

5. Input Credit on the materials is to be arrived at and to be set at against the output GST (Billed to the Smart City) In this regard, a copy of the detailed report submitted by the Consultants M/s.S.R.& M.R. Associated, Chartered Accountants to KUIDFC on goods & service tax matters is enclosed herewith for your reference and further action in the matter."

13. Subsequently, the State Government issued one more Circular dated 14.12.2020, which reads as under :-

No: ED/212/FC2/2020

Finance Department (PC-2) KWB/ CAO/ AS2/ AMRUT/