- ER. Roland S. Vs Government of Karnataka (Karnataka High Court)
- Petition Seeking Differential GST Reimbursement
- Works Contract and Introduction of GST
- Petitioner's Claim for Reimbursement
- Karnataka High Court's Consideration
- Legal Right to Seek Differential GST Reimbursement
- Final Order and Directions
ER. Roland S. Vs Government of Karnataka (Karnataka High Court)
Summary: The petitioner, a Class-I Registered Civil Contractor, approached the Karnataka High Court seeking a writ of mandamus directing the respondents to reimburse differential Goods and Services Tax (GST) of Rs.9,90,823/- with interest at 18% per annum from the date of remittance till realization, in terms of the representation dated 13.04.2026 at Annexure-B.
The petitioner had been entrusted with the work of construction of Class Three Government Servant Quarters at Kaikini Road Premises at Karwar in Karwar Taluk, Uttara Kannada District. During the subsistence of the contract, the GST regime came into force with effect from 01.07.2017, replacing the earlier Value Added Tax (VAT) regime. The petitioner claimed that the introduction of GST resulted in an additional tax liability which he was required to bear and that the differential tax amount was therefore liable to be reimbursed by the State respondents.
The petitioner submitted that he had already discharged the differential GST liability before the competent authority and instituted the writ petition alleging inaction by the respondents in reimbursing the amount.
The Karnataka High Court noted that the controversy concerning liability to bear differential tax following introduction of GST was no longer res integra. The Court referred to its decision in W.P.No.104908/2023, disposed of on 29.08.2023, wherein it had held that the recipient of works contract service was liable to bear the differential tax liability arising from introduction of GST and that the State, its instrumentalities and Departments were under an obligation to reimburse the differential GST amount payable by the contractor.
Following the consistent line of decisions on the issue, the Court held that the petitioner had acquired a corresponding legal right to seek reimbursement of the differential GST amount. It further held that the respondents, being beneficiaries of the work executed by the petitioner and in view of the law laid down by the Court, were under a bounden duty to reimburse the differential GST amount.
The writ petition was accordingly allowed. The respondents were directed to consider the representation dated 13.04.2026 and determine the differential GST amount payable to the petitioner in accordance with law. Upon such determination, the respondents were directed to reimburse the differential GST amount within six weeks from the date of receipt of a certified copy of the order. The Court clarified that reimbursement would be confined to the differential tax liability attributable to introduction of the GST regime and would remain subject to verification of records and calculations in accordance with law.
Petition Seeking Differential GST Reimbursement
The petitioner sought a writ of mandamus directing the respondents to reimburse Rs.9,90,823/- towards differential GST, together with interest at the rate of 18% per annum from the date of remittance till realization.
The claim was made pursuant to the petitioner’s representation dated 13.04.2026, produced as Annexure-B.
Works Contract and Introduction of GST
The petitioner was a Class-I Registered Civil Contractor and had been entrusted with the work of construction of Class Three Government Servant Quarters at Kaikini Road Premises at Karwar in Karwar Taluk, Uttara Kannada District.
During the subsistence of the contract, the GST regime came into force with effect from 01.07.2017, replacing the earlier VAT regime.
According to the petitioner’s case, the introduction of GST resulted in an additional tax liability which he was required to bear. The petitioner therefore sought reimbursement of the differential tax amount from the State respondents.
Petitioner’s Claim for Reimbursement
The petitioner stated that he had already discharged the differential GST liability before the competent authority.
The present writ petition was instituted alleging that the respondents had not reimbursed the differential GST amount despite the petitioner’s representation.
Karnataka High Court’s Consideration
The Court heard learned counsel for the petitioner and the learned Additional Government Advocate appearing for the State respondents and perused the records.
The Court noted that the controversy concerning liability to bear differential tax arising from the introduction of GST was no longer res integra.
The Court referred to its decision in W.P.No.104908/2023, disposed of on 29.08.2023. According to the Court, that decision held that the recipient of the works contract service was liable to bear the differential tax liability arising from introduction of GST.
The Court further noted that the earlier decision held that the State, its instrumentalities and Departments were under an obligation to reimburse the differential GST amount payable by the contractor.
Legal Right to Seek Differential GST Reimbursement
In the present case, the Court noted that the petitioner had already discharged the differential GST liability before the competent authority.
In view of the consistent line of decisions rendered by the Court on the issue, the Court held that the petitioner had acquired a corresponding legal right to seek reimbursement of the differential GST amount.
The Court further held that the respondents, being beneficiaries of the work executed by the petitioner and in view of the law laid down by the Court, were under a bounden duty to reimburse the differential GST amount.
The Court accordingly found that the petitioner had made out a case for issuance of a writ of mandamus.
TaxGuru has also reported a Karnataka High Court decision concerning reimbursement of differential GST arising from the introduction of GST on works contracts, in Differential GST on Pre-GST Works Contracts Reimbursable by State. The publication concerns a different matter and is therefore not treated as the case publication for the present judgment.
Final Order and Directions
The Karnataka High Court allowed the writ petition.
The respondents were directed to consider the representation dated 13.04.2026 at Annexure-B and determine the differential GST amount payable to the petitioner in accordance with law.
Upon such determination, the respondents were directed to reimburse the differential GST amount to the petitioner within six weeks from the date of receipt of a certified copy of the order.
The Court clarified that the reimbursement would be confined only to the differential tax liability attributable to the introduction of the GST regime and would be 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.9,90,823/- with interest at the rate of 18% per annum from the date of remittance till realization in terms of representation dated 13.04.2026 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 “construction of Class Three Government Servant Quarters at Kaikini Road Premises at Karwar in Karwar Taluk, Uttara Kannada District. It is the specific case of the petitioner that during the subsistence 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 13.04.2026 (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.
