M/S Sweet Home Constructions vs. The Government Of Karnataka
Original PDF →Facts
The petitioner, M/s. Sweet Home Constructions, represented by its proprietor Sri. Shivanand R. Shetty, filed a writ petition before the High Court of Karnataka. The petitioner sought a direction to the respondents, the Government of Karnataka and the Chief Engineer H & FWDEW, to refund the differential Goods and Services Tax (GST) amount paid for works executed. The claim was based on representations made by the petitioner to the Chief Engineer on November 21, 2024. The petitioner argued that the issue was settled by a previous judgment of a co-ordinate bench of the same High Court.
Held
The Court allowed the writ petition, directing the respondents to reimburse the GST amount as indicated in the petitioner's representation dated November 21, 2024. The Court's decision was based on its adherence to a previous judgment by a co-ordinate bench in W.P.No.9721 of 2019 and connected cases, disposed of on April 11, 2023. That earlier judgment had provided detailed guidelines for calculating the differential tax applicable to works contracts executed across the transition period from the Karnataka Value Added Tax (KVAT) regime to the GST regime. The guidelines included calculating works executed pre-GST, assessing payments received pre-GST under KVAT, determining balance works post-GST, deriving material rates, deducting KVAT and service tax, adding applicable GST, setting off input credit, and calculating the 'tax difference' on balance works. Crucially, the earlier judgment directed that if the revised GST-inclusive work value was higher, the employer was to pay or reimburse the differential tax amount to the petitioner. The High Court in the present case found that the petitioner's claim fell squarely within the ambit of these established directions and thus granted the relief sought.
Key Issues
1. Whether the petitioner is entitled to a refund of the differential GST amount paid for works executed, based on the principles laid down in previous judgments of this Court? Petitioner's contention: The petitioner argued that the issue at hand has been conclusively decided by a co-ordinate bench of the High Court in W.P.No.9721 of 2019 and connected cases, disposed of on April 11, 2023. They contended that this prior judgment provides a clear framework for calculating and reimbursing differential tax amounts in works contract scenarios involving the transition from the pre-GST regime (KVAT) to the GST regime. The petitioner relied on the directions issued in that judgment for calculating tax differences and reimbursing the petitioner for any excess tax paid. Respondents' contention: The judgment does not record any specific arguments made by the respondents. However, the court's order implies that the respondents were directed to consider the petitioner's representations in light of the established precedent.
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Cause title — parties, addresses and appearances
ORAL ORDER
The petitioner is before this Court seeking the following prayer: “a) Issue a writ or such other order in the nature of Mandamus directing the Respondents to refund the differential GST amount paid by the Petitioner for the works executed by the petitioner, as per the representations dated 21-11-2024 given by the Petitioner to Respondent 2 as per ANNEXURE-B. b) Any other relief that, the Hon’ble Courts deems it fit in the light of the facts and circumstances, in the ends of justice.”
Heard Sri Ravikiran P Pawar, learned counsel appearing for petitioner, Sri Mohammed Jaffar Shah, learned Additional Government Advocate appearing for respondents. NC: 2025:KHC:15051
Learned counsel for petitioner submits that the issue in the lis stands answered by the judgment rendered by the co-ordinate bench of this Court in W.P.No.9721 of 2019 and connected cases disposed on 11-04-2023. The coordinate bench considering the entire spectrum of law has passed the following order:
“20. In the result, I pass the following:-
ORDER
(i) Petitions are hereby disposed of.
(ii) The Respondents-State and other Govt agencies / Respondents who have entered into works contract with the Petitioners are issued the following directions / guidelines:-
(a) Calculate the works executed pre- GST (prior to 01.07.2017) under KVAT regime and payments received by the Petitioners.
(b) The payments received by the Petitioners pre-GST for such of the works executed before 01.07.2017 are to be assessed under KVAT tax regime – either under COT or VAT scheme as applicable.
(c) Calculate the balance works to be completed or completed after 01.07.2017, in the original contract.
(d) Derive the rate of materials, KVAT items required or used to complete the balance works. NC: 2025:KHC:15051 (e) Deduct the "KVAT" amount from those materials and the service tax, if applicable.
(f) Add the applicable "GST" on those items.
(g) Input Credit on the materials is to be arrived at and be set off as against the output GST, for those assessed under regular VAT.
(h) Further, the “tax difference” should be calculated on such balance works executed or to be executed after 01.07.2017 separately.
(i) Based on the result obtained on calculation of the tax difference on the contract value, concerned department/authority has to decide whether agreement needs to be changed or not.
(j) A supplementary agreement may be signed with the Petitioners for the revised GST-inclusive work value for the Balance Work completed or to be completed as determined above and in case the revised GST-inclusive work value for the Balance Work, completed or to be completed after 01.07.2017, is more than the original agreement work value, the Petitioners are to be paid /reimbursed, as the case may be, the differential tax amount by the concerned employer; so also, in case payments for works completed pre-GST are made post- GST, the concerned employer has to pay or reimburse, as the case may be, the differential tax amount, to the Petitioners.
(iii) Petitioners are directed to submit comprehensive representations to the respective employers/Respondents within a period of 4 weeks from the date of receipt of a copy of this order, irrespective of whether they have completed the NC: 2025:KHC:15051 works pre-GST or post-GST or payments were received or yet to be received post-GST.
(iv) If such representations are submitted, the respective employers/Respondents are directed to consider and dispose of the same in the light of the aforesaid directions / guidelines as expeditiously as possible and at any rate within a period of 8 weeks from the date of submission of the representations.
(v) In view of the interim orders passed by this Court in the present petitions, such of the petitioners who had not filed their GST returns during the period after 01.07.2017 are permitted to file their returns / amended returns, pursuant to the calculation of the differential tax as per procedure above under GST regime, without insisting on interest or penalty or limitation.
(vi) The GST authorities are also directed not to take precipitative action against the Petitioners for a period of 6 months from the date of receipt of a copy of this order.
(vii) Liberty is reserved in favour of the petitioners to challenge any order / decision passed / taken by the respondents or the authorities, subsequent to this order and also take recourse to such remedies as available in law.”
The afore-quoted judgment is followed by this Court in W.P.No.107489 of 2024 disposed on 19-02-2025. In view of the judgments as quoted supra, this petition also deserves to succeed. Hence, the following:
ORDER
(i) The Writ Petition is allowed. NC: 2025:KHC:15051 (ii) The respondents are hereby directed to reimburse the GST amount, as indicated in the representation dated 21-11-2024, within a period of six weeks from the date of receipt of the copy of this order. (M.NAGAPRASANNA) JUDGE
BKP List No.: 1 Sl No.: 114
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.