In works contracts executed for the State, the incidence of GST, being an indirect tax, is to be borne by the service recipient (the State). Once the contractor proves discharge of the tax liability, the State is legally obligated to reimburse the GST component.

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO (I) DIRECTING THE RESPONDENTS TO IMMEDIATELY PAY TO THE PETITIONER PRINCIPAL OUTSTANDING THE AMOUNT OF THE RS. 17,29,50,226/-, BEING THE GST PAYABLE BY RESPONDENTS TO THE PETITIONER FOR THE SUBJECT TAX PERIODS, TOGETHER WITH INTEREST THEREON WHICH IS TO BE COMPUTED FROM THE RESPECTIVE DATES ON WHICH THE PETITIONER REMITTED THE SAID AMOUNT OF GST TO THE TAX AUTHORITIES TILL THE DATE(S) ON WHICH THE AMOUNT(S) IS PAID TO THE PETITIONER AND ETC.,

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

ORAL ORDER

The captioned petition is filed by the petitioner/company seeking direction to the respondents to pay the outstanding GST amount of Rs.17,29,50,226/- along with interest at 18%.

Heard learned counsel for the petitioner and learned AGA. Perused the materials placed on record.

The petitioner–Company contends that it has duly executed the works entrusted by the respondent–State and its instrumentalities in terms of the contractual arrangements. It is averred that upon completion of the assigned works, the petitioner has raised invoices towards the value of work executed, inclusive of the applicable tax component, which are placed on record as Annexures–C and D. It is the specific grievance of the petitioner that despite submission of detailed representations dated 29.07.2024 and 03.08.2024 (Annexures–A1 to A9) seeking reimbursement of the Goods and Services Tax (GST) component, there has been a complete inaction on the part of respondent Nos.1 to 9 in considering and adjudicating the said representations. The petitioner would assert that such inaction is arbitrary and violative of Articles 14 and 300-A of the Constitution of India, as the amounts lawfully due to it remain withheld without any justifiable cause.

Placing reliance on the judgment rendered by this Court in M/s B.H. Gangadharachar v. State of Karnataka in W.P.No.5354/2026, learned counsel for the petitioner would contend that the issue relating to reimbursement of differential tax liability arising on account of transition from the pre-GST regime to the post-GST regime, particularly in the context of works contracts, is no longer res integra. It is submitted that this Court, in the said decision as well as in a catena of subsequent judgments, has unequivocally held that where the contractor has discharged the statutory liability of GST on the works executed, the burden of such tax, being in the nature of an indirect levy, is liable to be borne by the service recipient, namely, the State or its instrumentalities. Therefore, it is contended that the respondent–State is legally obligated to reimburse the GST component paid by the petitioner.

This Court, having given anxious consideration to the rival submissions and upon perusal of the material on record, finds that the controversy involved in the present petition stands squarely covered by the settled principles laid down by this Court in the aforesaid decision and other binding precedents. It is well settled that under the scheme of the Goods and Services Tax regime, the liability to remit tax to the Government is cast upon the supplier; however, the incidence of such tax is ultimately intended to be borne by the recipient of the service. In the context of works contracts executed for the State, once the contractor establishes that it has discharged the GST liability in accordance with law, the corresponding obligation to reimburse the tax component would fall upon the respondent–State.

Regard being had to the statutory framework, more particularly Section 13 of the Goods and Services Tax Act, 2017, which governs the time of supply of services and the crystallization of tax liability, this Court is of the considered view that the petitioner, having discharged the tax liability, cannot be left remediless. The