Naganath Constructions Engineers And Contractors Vs Government of Karnataka (Karnataka High Court)
Summary: The Karnataka High Court considered a writ petition filed by a Class-I Registered Civil Contractor seeking a mandamus directing the respondents to reimburse differential Goods and Services Tax (GST) of Rs.1,50,935.68/- with interest at the rate of 18% per annum from the date of remittance till realization, pursuant to representation dated 25.06.2026.
The petitioner had been entrusted with the works contract of rectification of road surface, recerpetting and improvements of Kuchegar Kodar Road from KM 0.00 to 2.00 in Karwar Taluka, Uttara Kannada District. According to the petitioner, during the currency 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 contended that, consequent upon introduction of GST, it was required to bear additional tax liability and therefore sought reimbursement of the differential tax amount from the State respondents.
The Court noted that the controversy concerning liability to bear differential tax consequent upon introduction of GST was no longer res integra. It referred to its decision in W.P.No.104908/2023, disposed of on 29.08.2023, in which the Court had held that the recipient of the works contract service was liable to bear the differential tax liability arising on account of 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.
