Shri Basavaraj M Purad S/O Manohar Purad vs. The State Of Karnataka

Facts

The petitioner, Shri Basavaraj M. Purad, a Class I contractor, was awarded a civil contract for road improvement works for a sum of Rs.19,78,85,944/-. The contract was awarded after July 1, 2017, under the GST regime. The petitioner completed the work and sought payment including GST at 18%. However, the respondents made payment calculating GST at 12%. Consequently, the petitioner submitted a representation dated November 7, 2023, to the Executive Engineer, National Highway Division, Hubballi (Respondent No. 4), seeking reimbursement of the differential GST amount of Rs.2,45,54,761.00, along with 15% interest for the delayed period. The petitioner approached the High Court seeking a writ of mandamus to direct the respondent to consider this representation and make the payment.

Held

The Court held that the petitioner's claim for reimbursement of the balance GST amount was squarely applicable to the present facts, citing the ratio in the decision of Shri Jinaraj and Co- Registered Partnership Firm V/s State of Karnataka and another (W.P.no.100644/2024). The Court found no dispute regarding the award and completion of the contract works and the payment made by the respondents. The core issue was the differential GST rate applied. The Court directed the respondents to take note of the petitioner's representation, compute the total applicable GST, compare it with the amount already paid, and then proceed to pay the balance amount. The reasoning was based on the principle that contractors should be reimbursed for the correct GST applicable to their services, as established in previous judgments. The operative direction was for the respondents to process the payment of the balance GST within four weeks from the receipt of the certified copy of the order.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the balance GST amount at the rate of 18% as claimed, when the respondents have paid GST at 12%? The petitioner argued that the contract was awarded under the GST regime and that the applicable GST rate for the work was 18%. They contended that the respondents erroneously calculated and paid GST at 12%, leading to a shortfall. The petitioner relied on previous judgments of this Court in W.P.no.104908/2023 and W.P.no.9721/2019, where similar directions were issued to reimburse the balance GST amount. The respondents, through the learned AGA, conceded that the petitioner's claim for the entire extent of GST might be justified in view of the decisions relied upon. However, they submitted that the exact amount claimed would require factual verification.