M/S Bsm Construction Company vs. The State Of Karnataka

Facts

M/s BSM Construction Company, a partnership firm, filed a writ petition seeking a mandamus directing the respondents (State of Karnataka and various Executive Engineers) to refund the differential Goods and Services Tax (GST) amount paid by the petitioner. The petitioner, a civil contractor, completed various works contracts awarded after July 1, 2017, under the GST regime. The petitioner claims that while they sought payment with applicable GST at 12%, the respondents made short payments without computing the full GST. The petitioner submitted representations on August 1, 2023, to the respondent-employers for reimbursement of the GST amount. The respondents acknowledged the petitioner's claim regarding GST but stated that the amount claimed would require factual verification.

Held

The Court held that the ratio in the decision of Shri Chandrashekaraiah and others V/s State of Karnataka and another (W.P.no.9721/2019 with connected matters disposed of on 11.04.2023) would be squarely applicable to the present facts. Consequently, the Court directed the respondents to reimburse the GST. The Court ordered the respondents to take note of the petitioner's representation at Annexure-B (colly), compute the total extent of GST applicable, compare it with the amount already paid, and take steps for the payment of the balance amount within four weeks from the date of receipt of a certified copy of the order. The second prayer regarding the issuance of a circular/policy was not expressly addressed in the operative part of the order, but the primary relief of reimbursement was granted.

Key Issues

1. Whether the petitioner is entitled to a writ of mandamus directing the respondents to refund the differential GST amount paid for works contracts executed after July 1, 2017, as per representations dated August 1, 2023? 2. Whether the State Government should issue a circular or policy to address the payment of GST on works contracts executed under the VAT regime or under old schedules of rates where GST was not paid by employers but levied and paid by contractors? Petitioner's arguments: The petitioner contended that they completed works and sought payment with applicable GST at 12%, but respondents made short payments. They relied on previous High Court decisions in W.P.no.104908/2023 and W.P.no.9721/2019, which directed respondent-authorities to reimburse the balance GST amount in similar circumstances. Therefore, the petitioner sought the refund of the differential GST. Respondents' arguments: The learned Additional Government Advocate for the respondents conceded that the petitioner's claim in respect of the entire extent of GST might be justified in view of the decisions relied upon. However, they argued that the amount claimed would require factual verification.