M/S Sweet Home Constructions vs. The Government Of Karnataka
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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, Dharwad Bench. The petitioner sought a writ of mandamus directing the respondents, the Government of Karnataka and the Executive Engineer, PWD, Karwar Division, to refund the differential GST amount paid for works executed. The petitioner had submitted representations dated 21-11-2024 to the second respondent seeking this refund. The core of the dispute revolves around the GST implications for works contracts executed partly before and partly after the introduction of GST on July 1, 2017, and the subsequent payment of taxes.
Held
The Court allowed the writ petition, directing the respondents to reimburse the GST amount as indicated in the petitioner's representation dated 21.11.2024. The reasoning was based on a prior judgment by a Coordinate Bench in W.P.No.9721/2019. That judgment had laid down specific guidelines for calculating the differential GST on works contracts executed across the pre-GST and post-GST periods. These guidelines included calculating works executed pre-GST under the KVAT regime, calculating balance works post-GST, deriving material rates, deducting KVAT and service tax, adding applicable GST, arriving at input credit, and calculating the tax difference. The Court noted that if the revised GST-inclusive work value for balance work was more than the original agreement value, or if payments for pre-GST works were made post-GST, the employer had to pay or reimburse the differential tax amount. The present Court found that the petitioner's case fell within the ambit of this precedent and thus deserved to succeed with the same order. The respondents were directed to reimburse the amount within six weeks of receiving a copy of the order.
Key Issues
1. Whether the respondents are liable to refund the differential GST amount paid by the petitioner for works executed, as per the representations dated 21-11-2024? (Question of law and fact, concerning the application of GST provisions to works contracts executed across the GST transition period). The petitioner argued that the issue stands answered by a judgment of a Coordinate Bench in W.P.No.9721/2019, which provided specific directions for calculating and reimbursing differential GST amounts for works executed before and after the GST regime. The petitioner relied on this precedent to support their claim for refund. The respondents (Government of Karnataka and Executive Engineer, PWD) did not record any specific arguments against the petitioner's claim in the judgment. However, their role as the paying authority for the works contracts implies their responsibility in processing the refund.
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ORAL ORDER
(PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA)
The petitioner is before this Court seeking the following relief: “i. To issue a writ or such other order in the nature of mandamus directing the respondents to refund the differential GST amount paid by the petitioners for the works executed by each of the petitioners respectively, as per the representations dated 21-11-2024 given by the petitioners contractors to respondent 2 as per Annexure-B. ii. Any other relief that, the Hon’ble Court deems it fit in the light of the facts and circumstances, in the ends of justice.”
Heard the learned counsel Sri. Ravikiran P. Pawar appearing for the petitioner, learned counsel Smt.Veena Hegde appearing for the respondent No.2 and NC: 2025:KHC-D:3441 the learned AGA Sri.Sharad A.Magadum representing the respondent No.1-State.
The learned counsel for the petitioner submits that the issue in the lis stands answered by a judgment rendered by a Coordinate Bench in W.P.No.9721/2019 connected with matters disposed on 11.04.2023, which reads as follows:
"
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 preGST 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. NC: 2025:KHC-D:3441 (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 NC: 2025:KHC-D:3441 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 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 NC: 2025:KHC-D:3441 and also take recourse to such remedies as available in law."
In that light, the petition deserves to succeed with the same order.
For the aforesaid reasons, the following: ORDER i. The petition is allowed. ii. The respondents are hereby directed to reimburse GST amount as indicated in the representation dated 21.11.2024. iii. The respondents/Department shall reimburse the said amount within a period of six weeks from the date of receipt of a copy of this order. (M.NAGAPRASANNA) JUDGE
KGK List No.: 1 Sl No.: 175
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.