Yogisha R vs. The State Of Karnataka - Karnataka High Court, 26 March 2025

Cause title — parties, addresses and appearances

- 1 - NC: 2025:KHC:12959 WP No. 569 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 569 OF 2024 (T-RES) BETWEEN: YOGISHA R S/O RAJU, AGED ABOUT 43 YEARS, R/AT KHATA NO.2996, MYLARALINGESHWAR NILAYA, RING ROAD, VIDYA NAGARA, HASSAN DISTRICT- 573 211 …PETITIONER (BY SRI. HALESHA R G.,ADVOCATE) AND: 1. THE STATE OF KARNATAKA FINANCE DEPARTMENT, II FLOOR, VIDHANA SOUDHA, BENGALURU- 560 001 REP BY ADDL CHIEF SECRETARY. 2. THE UNION OF INDIA MINISTRY OF FINANCE, NEW DELHI- 110 001 REP BY ITS SECRETARY. 3. THE GOODS AND SERVICES TAX COUNCIL JANPATH, CONNAUGHT PLACE, NEW DELHI- 110 01 REP BY SPECIAL SECRETARY. 4. PRINCIPAL COMMISSIONER OF CENTRAL TAX NO.1, QUEENS ROAD, VASANTH NAGAR, BENGALURU-560 001 Digitally signed by NANDINI D Location: High Court of Karnataka - 2 - NC: 2025:KHC:12959 WP No. 569 of 2024 5. COMMISSIONER OF COMMERCIAL TAXS GOVERNMENT OF KARNATAKA, VANIJYA THEREGIGE KARYALAYA, IST MAIN ROAD, GANDHINAGAR, BENGALURU- 560 009 6. JOINT COMMISSIONER OF COMMERCIAL TAXES (ADMN) DIVISIONAL VAT, SHIMOGA- 577 201 7. OFFICE OF PRINCIPAL COMMISSIONER GST AND CENTRAL EXCISE, MYSORE- 570 001. 8. OFFICE OF THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT) HASSAN- 573 201. 9. THE EXECUTIVE ENGINEER H AND FW, DEPARTMENT, ENGINEERING SUB DIVISION, HASSAN- 573 201. 10. THE EXECUTIVE ENGINEER PUBLIC WORKS PORTS AND INLAND WATER TRANSPORT, HASSAN DIVISION, HASSAN DISTRICT- 573 201. 11. PRIMARY HEALTH OFFICER ADMINISTRATIVE, COMMUNITY HEALTH CENTRE, KONANURU, ARAKALAGUDU TALUK, HASSAN DISTRICT-573130 12. PRIMARY HEALTH OFFICER ADMINISTRATIVE, COMMUNITY HEALTH CENTRE, GANGUR, ARAKALAGUDU TALUK, HASSAN DISTRICT-573130 - 3 - NC: 2025:KHC:12959 WP No. 569 of 2024 13. PRIMARY HEALTH OFFICER ADMINISTRATIVE, COMMUNITY HEALTH CENTRE, DODDABEMMATHI, ARAKALGUDU TALUK, HASSAN DISTRICT- 573 130 14. TALUK HEALTH OFFICER ADMINISTRATIVE, ARAKALAGUDU, HASSAN DISTRICT- 573 102 15. PRIMARY HEALTH OFFICER ADMINISTRATIVE, COMMUNITY HEALTH CENTRE, BASAVAPATTANA, HASSAN DISTRICT- 573 130. 16. THE EXECUTIVE ENGINEER PWD DEPARTMENT, HASSAN DIVISION, HASSAN DISTRICT- 573 201. …RESPONDENTS (BY SRI. HEMAKUMAR.K AGA FOR R-1, R-5 TO R-16; SRI. MADANAN PILLAI, CGC FOR R-2; SRI. JEEVAN.J. NEERALGI, ADVOCATE FOR R-3 AND R-4) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS NO. 9 TO 16 TO CONSIDER THE REPRESENTATION MADE ON 04.12.23 BY THE PETITIONER TO THEM PRODUCED AT ANNEXURE-C1, C2, C3, C4, C5, C6 AND C7 AND DIRECT THEM TO RELEASE THE GST TAX AMOUNT AS STIPULATED BY THE GST ACT. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR - 4 - NC: 2025:KHC:12959 WP No. 569 of 2024

ORAL ORDER

In this petition, petitioner seeks for the following reliefs:

(a) Pleased to issue a writ, orders or direction to the Respondents No.9 to 16 to consider the Representation made on 04-12-2023 by the Petitioner to them produced at Annexure-C1, C2, C3, C4, C5, C6 & C7 and direct them to release the GST Tax amount as stipulated by the GST Act. (b) Declare that the provisions of GST Act is inapplicable in respect of works contract where 'provisions of service' are made prior to 01.07.2017 in so far s petitioners are concerned and consequently that the respondent Nos.4 to 8 have no juri iction to either issue notice o to take any coercive steps against the Petitioners under the provisions of the GST Act dated 01-07-2017. (c) Declare that the provisions of Section 7(3) read with clause 6 of Schedule II of the GST Act is ultra-virus Article 366 (12A), (26A) (29A) (b) & (f) the Constitution in view of and settled principles of law laid down by the Hon'ble Supreme Court regarding "works contract" and consequently that the respondent Nos.4 to 8 have no juri iction to either issue notice or to take any coercive steps against the NC: 2025:KHC:12959 Petitioners under the provisions of the GST Act for "works contract" entered into post 01.07.2017 i.e., after the GST Act came into effect. (d) Pass such other orders as may be deemed appropriate under the circumstances of the case, in the ends of justice.”

Karnataka - W.P.No.9721/2019 and connected cases dated 11.04.2023, wherein it is held as under:

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 NC: 2025:KHC:12959 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. (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 NC: 2025:KHC:12959 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 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. NC: 2025:KHC:12959 (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."

A Co-ordinate Bench of this Court in the case of another - W.P.No.104908/2023 dated 29.08.2023 followed the aforesaid order and allowed the petition. The Co- ordinate Bench has held as follows:

It is not in dispute that the entire tender process and allocation of work by respondent/Department is post coming into force of Goods and Services Tax. If petitioner, who is a registered Civil Contractor has completed the tender work, respondent/Department being a service recipient is under bounden duty to reimburse GST amount of Rs.2,16,51,903/- in terms of Section 13 of The Central Goods and Services Tax Act, 2017. It is also not in dispute that petitioner, who is a class-I contractor having rendered service, is under mandatory duty to pay GST amount to the department. Equally respondent/Department is under bounden duty to reimburse the GST amount. It is borne out from the records that since necessary NC: 2025:KHC:12959 payment at the petitioner's end the applicable GST being statutory requirement, the respondent/Department ought to have reimbursed 12% GST amount on the total work done by petitioner. Since, there is total inaction on the part of respondent/Department, this is a fit case where mandamus needs to be issued. For the reasons stated supra, I proceed to pass the following: ORDER i) Writ petition is allowed. ii) The respondent is hereby directed to reimburse GST amount as indicated in the representation dated 15.04.2023 vide Annexure-E.

iii) The respondent/Department shall reimburse the said amount within a period of six weeks from the date of receipt of copy of this order.”

In the light of the issue having been answered by this Court as well as a co-ordinate Bench of this Court (supra), the petition deserves to be allowed.

For the aforesaid reasons, the following: State of Karnataka - W.P.No.9721/2019 and connected cases dated 11.04.2023. NC: 2025:KHC:12959 ii. The concerned respondents are hereby directed to reimburse GST amount as indicated in the representations at Annexures – C1 to C7 back to the petitioner, within a period of three months weeks from the date of receipt of a copy of this order. (S.R.KRISHNA KUMAR) JUDGE

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