M/S Shravan S/O Manikrao Mulbharati And Anr vs. The State Of Karnataka And Ors
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Cause title — parties, addresses and appearances
ORDER
The petitioner is before this Court seeking for the following reliefs: a. Declare that the provisions of GST Act is applicable in respect of works contract where ‘provisions of service’ are made prior to 01.07.2017 in so far as NC: 2023:KHC-K:4627 petitioners are concerned and consequently that the respondent Nos. 3 to 6 have no juri iction to either issue notice or to take any coercive steps against the petitioners under the provisions of the GST Act;
b. Declare that the provisions of Section 7(3) read with clause of Schedule II of the GST Act is ultra- vires 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. 3 to 9 have no juri iction to either issue notice or to take any coercive steps against the 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 as per Annexure-G1 & G2 from date 01/07/2017;
c. Direct the respondent No.1 to consider the representations as per Annexure-C dated 03.12.2018 in tandem with Annexures-D dated 27.10.2017, Annexure-E dated 23.10.2017 and d. Pass such other orders as may be deemed appropriate under the circumstances of the case, in the ends of justice.
In the above matter, the lis and the reliefs which have been sought for are more or less identical to that sought for in W.P. No.9721/2019. 3. Learned counsel for the petitioner would submit that the lis is covered by the decision of a Coordinate Bench of this court in W.P. No. 9721 of 2019 and NC: 2023:KHC-K:4627 other connected matters, disposed of on 11.04.2023. He submitted that the said order could be passed in the present matter also. There is no particular opposition by the respondents’ councils.
Paragraph 20 of the said order is reproduced hereunder for easy reference:
“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 NC: 2023:KHC-K:4627 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 reimburse, as the case may be, the differential tax amount, to the Petitioners.
(iii) Petitioners are directed to submit NC: 2023:KHC-K:4627 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 and also take recourse to such remedies as available in law.” NC: 2023:KHC-K:4627
Paragraph 20 being applicable, I pass the following: ORDER i. The writ petition is disposed of in terms of paragraph 20 of the order dated 11.04.2023 passed in W.P. No.9721/2019 and connected matters. JUDGE
LN List No.: 1 Sl No.: 69
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.