Allowed

M/S Apoorva Construction Co., v. State of Karnataka

Karnataka HC19 Feb 2024WP/28/2024

Case brief

AI extract

What is this about?

A works contractor sought reimbursement of differential GST paid on works executed under the VAT regime or pre-GST rates. Relying on earlier coordinate bench orders laying down a tax-difference calculation mechanism and mandating GST reimbursement by employer departments, the Court allowed the writ petition.

What did the court decide?

Respondents directed to reimburse GST amounts as per representations dated 02.08.2022, 16.06.2023, 17.06.2023, 20.09.2023 and 30.09.2023, within six weeks.

M/S Apoorva Construction Co., Vs State of Karnataka — GST and Indirect Tax | Karnataka HC (2024)

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NC: 2024:KHC:7125 WP No. 28 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 19^TH DAY OF FEBRUARY, 2024

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BEFORE

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THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO.28 OF 2024 (GM-RES)

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BETWEEN:

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M/S. APOORVA CONSTRUCTION CO., A PARTNERSHIP FIRM HAVING ITS OFFICE (REGISTERED U/S 58(1) OF INDIAN PARTNERSHIP ACT 1932) AT GROUND FLOOR NO.68786, 3^RD MAIN JAYANAGAR (EAST) TUMAKURU - 572102 (REPRESENTED BY ITS PARTNER SRI. PALAKSHAIAH) …PETITIONER

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(BY SRI. NAVEEN G S., ADVOCATE)

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AND:

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STATE OF KARNATAKA DEPARTMENT OF FINANCE Digitally signed 2^ND FLOOR, by NAGAVENI VIDHANA SOUDHA Location: HIGH DR. AMBEDKAR VEEDHI COURT OF BENGALURU - 560001 KARNATAKA REPRESENTED BY ITS ADDITIONAL CHIEF SECRETARY

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THE EXECUTIVE DIRECTOR KARNATAKA RESIDENTIAL EDUCATIONAL INSTITUTIONS SOCIETY (KRIES) 6^TH AND 7^TH FLOOR CUNNINGHAM ROAD BENGALURU - 560052 3. THE EXECUTIVE ENGINEER KARNATAKA STATE POLICE HOUSING AND

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NC: 2024:KHC:7125 WP No. 28 of 2024

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INFRASTRUCTURE DEVELOPMENT CORPORATION NO.59, RICHMOND ROAD (GEN. K.S. THIMMAIAH ROAD BENGALURU 560025

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THE SUPERINTENDENT ENGINEER (TECH) MESCOM MANGALORE - 575004

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THE CHIEF ENGINEER TRANSMISSION ZONE KPTCL HASSAN - 573201

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THE EXECUTIVE ENGINEER KSRTC MYSORE - 570004

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THE EXECUTIVE ENGINEER PUBLIC WORKS DEPARTENT CHITRADURGA - 577501

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THE EXECUTIVE ENGINEER KSRTC TUMKUR 572106

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…RESPONDENTS

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(BY SMT. NAVYA SHEKHAR HCGP FOR R1)

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THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO a) DIRECT 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 02/08/2022, 16/06/2023, 17/06/2023, 20/09/2023 AND 30/09/2023 ETC., GIVEN BY THE PETITIONERS - CONTRACTORS TO RESPECTIVE RESPONDENT -

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NC: 2024:KHC:7125 WP No. 28 of 2024

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EMPLOYERS (AS PER THE ABSTRACT ANNEXED) AND PRODUCED AT ANNEUXRE -B TO B4) AND ETC.,

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner is before this Court, seeking the following

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prayers:

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"( a) 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 02.08.2022, 16.06.2023, 17.06.2023, 20.09.2023 and 30.09.2023 etc., given by the Petitioners-Contractors to respective Respondent-employers (as per the abstract Annexed) and produced at Annexure - B to B4.

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(b) Issue a writ or such other order directing the Respondent No.1 - State Government, to issue a circular/policy to address the issue of payment of GST on works contract which are executed under VAT regime or under old Schedule of Rates wherein, GST is not paid by the Respondent-Employers but is levied and

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NC: 2024:KHC:7125 WP No. 28 of 2024

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paid by the Petitioner-Contractors to the GST department.

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(c) Pass such other orders as may be deemed appropriate under the circumstances of the case, in the ends of justice."

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Heard Sri. Naveen G.S., learned counsel appearing

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for the petitioner, Smt. Navya Shekhar, learned AGA appearing for respondent No.1 and have perused the material on record.

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Learned counsel appearing for the petitioner submits that the prayer that is sought is to be allowed in the light of the law laid down by the Co-ordinate Bench in W.P.No.9721/2019 and connected cases disposed on 11.04.2023, wherein the Co-ordinate Bench of this Court, has held as follows:

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"20. In the result, I pass the following:- ORDER

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(i) Petitions are hereby disposed of.

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(ii) The Respondents-State and other Govt agencies / Respondents who have entered into works contract with the Petitioners are issued the following directions / guidelines:-

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(a) Calculate the works executed pre-GST (prior to 01.07.2017) under KVAT regime and payments received by the Petitioners.

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NC: 2024:KHC:7125 WP No. 28 of 2024

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(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.

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(c) Calculate the balance works to be completed or completed after 01.07.2017, in the original contract.

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(d) Derive the rate of materials, KVAT items required or used to complete the balance works.

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(e) Deduct the "KVAT" amount from those materials and the service tax, if applicable.

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(f) Add the applicable "GST" on those items.

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(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.

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(h) Further, the “tax difference” should be calculated on such balance works executed or to be executed after 01.07.2017 separately.

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(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.

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(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.

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(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-

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NC: 2024:KHC:7125 WP No. 28 of 2024

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GST or payments were received or yet to be received post-GST.

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(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.

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(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.

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(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.

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(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."

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Another Co-ordinate Bench of this Court in terms of

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its order dated 29.08.2023 in W.P.No.104908/2023 follows the aforesaid order and allows the petition. The Co-ordinate Bench has held as follows:

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"5. 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

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NC: 2024:KHC:7125 WP No. 28 of 2024

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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 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:

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ORDER

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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.

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In the light of the issue standing answered, the petition

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deserves to succeed and the prayer that is sought for is to be allowed.

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For the aforesaid reasons, the following:

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ORDER

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i. The petition is allowed.

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NC: 2024:KHC:7125 WP No. 28 of 2024

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ii. The respondents are hereby directed to reimburse GST amount as indicated in the representations dated 02.08.2022, 16.06.2023, 17.06.2023, 20.09.2023 and 30.09.2023.

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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.

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Sd/JUDGE

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HJ List No.: 1 Sl No.: 33

M/S Apoorva Construction Co., v. State of Karnataka

Case brief

What is this about?

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M/S Apoorva Construction Co., v. State of Karnataka

Case brief

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