Case Law Details
Er. Roland S. Fernandes Vs Government of Karnataka (Karnataka High Court)
The Karnataka High Court considered a writ petition filed by a Class-I registered civil contractor seeking a writ of mandamus directing the State to reimburse the differential Goods and Services Tax (GST) of Rs. 6,20,826.56, along with interest, arising from the introduction of the GST regime during the execution of a works contract.
The petitioner had been awarded a contract for repairs and renovation of an existing building. During the subsistence of the contract, the GST regime came into effect on 1 July 2017, replacing the earlier VAT regime. The petitioner contended that this transition resulted in an additional tax liability, which had already been discharged before the competent authority, and sought reimbursement from the State.
The High Court observed that the issue was no longer res integra, referring to its earlier decision in W.P. No. 104908/2023, wherein it had held that the recipient of works contract services is liable to bear the differential tax liability arising from the introduction of GST. It had also held that the State, its departments, and instrumentalities are obligated to reimburse contractors for such differential GST liability.
Applying the same principle, the Court held that the petitioner had acquired a corresponding legal right to seek reimbursement after having paid the differential GST. Since the respondents had benefited from the execution of the works contract and the legal position had already been settled by the High Court, they were under a duty to reimburse the differential GST amount. Accordingly, the Court found that the petitioner had established a case for issuance of a writ of mandamus.
The writ petition was allowed. The respondents were directed to consider the petitioner’s representation dated 21.04.2026, determine the differential GST payable in accordance with law, and reimburse the amount within six weeks from receipt of a certified copy of the order. The Court clarified that reimbursement would be confined only to the differential tax liability attributable to the introduction of the GST regime and would remain subject to verification of records and calculations in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is seeking mandamus directing the respondents to reimburse the differential Goods and Services Tax (for short ‘GST’) amount of Rs.6,20,826.56/- with interest at the rate of 18% per annum from the date of remittance till realization in terms of representation dated 21.04.2026 as per Annexure-B.
2. Heard learned counsel for the petitioner and learned Additional Government Advocate appearing for respondents-State. Perused the records.
3. The petitioner, a Class-I Registered Civil Contractor, was entrusted with the work of “Repairs and Renovation Works (Balance Works)” to the existing TLH Building at Haliyal, Uttara Kannada District. It is the specific case of the petitioner that during the currency of the contract, the Goods and Services Tax (GST) regime came into force with effect from 01.07.2017, replacing the earlier Value Added Tax (VAT) regime. Consequent upon such introduction of GST, the petitioner was required to bear additional tax liability and, therefore, claims reimbursement of the differential tax amount from the respondents-State.
4. The controversy relating to liability to bear the differential tax consequent upon introduction of GST is no longer res integra. In an identical matter in W.P.No.104908/2023, disposed of on 29.08.2023, this Court has held that the recipient of the works contract service is liable to bear the differential tax liability arising on account of introduction of GST. This Court has further held that the State, its instrumentalities and Departments are under an obligation to reimburse the differential GST amount payable by the contractor.
5. In the present case, the petitioner has already discharged the differential GST liability before the competent authority. Alleging inaction on the part of the respondents in reimbursing the said amount, the present writ petition is instituted. In view of the consistent line of decisions rendered by this Court on the issue, the petitioner has acquired a corresponding legal right to seek reimbursement of the differential GST amount. The respondents, being beneficiaries of the work executed by the petitioner and in view of the law laid down by this Court, are under a bounden duty to reimburse the differential GST amount. Therefore, this Court is of the view that the petitioner has made out a case for issuance of a writ of mandamus.
6. For the foregoing reasons, this Court proceeds to pass the following:
ORDER
(i) The writ petition is allowed.
(ii) The respondents are directed to consider the representation dated 21.04.2026 (Annexure–B) and determine the differential GST amount payable to the petitioner in accordance with law.
(iii) Upon such determination, the respondents shall reimburse the differential GST amount to the petitioner within a period of six weeks from the date of receipt of a certified copy of this order.
(iv) It is made clear that the reimbursement shall be confined only to the differential tax liability attributable to the introduction of the GST regime and shall be subject to verification of records and calculations in accordance with law.
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