Office of Principal Commissioner Vs R. Chandrashekar (Karnataka High Court)
The Karnataka High Court decided appeals challenging a common order of a Single Judge in a batch of writ petitions concerning the applicability of GST to works contracts that were entered into before 01.07.2017 but continued after the introduction of the GST regime.
The writ petitioners were contractors registered under the Karnataka Value Added Tax Act (KVAT) who subsequently obtained GST registration after GST came into force. They had executed works contracts awarded by various Government departments and agencies, with most contracts entered into before 01.07.2017 under the then-prevailing Schedule of Rates. Many had opted for the KVAT Composition Scheme, while others were assessed under the regular VAT scheme. Although part of the work was executed before GST, some work, invoicing, or payments occurred after 01.07.2017.
The agreements provided that the quoted rates were inclusive of applicable sales and other taxes. The contractors contended that these rates did not account for GST, which became applicable at 18% from 01.07.2017 to 21.08.2017 and 12% thereafter, increasing their tax burden. After receiving notices from tax authorities requiring payment of GST and filing of returns, with cancellation of GST registration proposed for non-compliance, the contractors sought reimbursement of the additional tax burden from the employers and requested that no coercive action be taken. Their representations were not accepted, leading to the writ petitions.
