Bruhath Bangalore Mahanagara Palike Vs PMJ Constructions Pvt. Ltd. (Karnataka High Court)
The Karnataka High Court considered an appeal filed by the Bruhath Bangalore Mahanagara Palike (BBMP) challenging a Single Judge’s order directing reimbursement of Rs. 2,23,23,979.92 towards the differential Goods and Services Tax (GST) paid by a contractor executing public works.
The respondent, a registered contractor, had been awarded works under contracts dated 20.03.2013 and 29.10.2015. The dispute was confined to reimbursement of the additional tax liability arising after the implementation of the GST regime from 01.07.2017, as the contractor did not dispute running bills raised before that date. The contractor continued executing the works after GST came into force and claimed reimbursement of the incremental tax paid.
The contract provided that the contract price was inclusive of all prevailing taxes. However, Clause 8 of the Special Conditions of Contract also stipulated that if taxes, duties or levies increased due to changes made by the Central or State Government after the tender submission, BBMP could reimburse the increase upon proper certification from the appropriate tax authorities. The contractor claimed reimbursement of the differential tax, calculated at 8% of the value of the running account bills, contending that VAT at 4% had applied before GST. Reliance was also placed on a BBMP circular dated 11/21.09.2017 supporting reimbursement of GST.
