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.
