Sri. H. Shankar Kumar Vs State of Karnataka — GST and Indirect Tax | Karnataka HC (2025)

Sri. H. Shankar Kumar Vs State of Karnataka — GST and Indirect Tax | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Petition allowed and disposed of in terms of the order in WP No.9721/2019 (Sri. Chandrashekaraiah); concerned respondents directed to reimburse the GST amount indicated in the representations at Annexures 'B' and 'B1' to 'B3' to the petitioner within six weeks from receipt of a copy of the order.

Issue for consideration

Whether respondents 2 to 4 are to be directed (by mandamus) to reimburse the differential GST amount to the petitioner for the works executed by him, in terms of the orders of this Court in WP No.9721/2019, as per his representations dated 22.06.2023 (Annexures 'B' and 'B1' to 'B3'). +1 more

Court's answer

Since the issue raised in the petition already stands answered by this Court in Sri. Chandrashekaraiah (WP No.9721/2019 and connected cases, dated 11.04.2023) and by a Co-ordinate Bench in Shri M.G. Arunkumar (WP No.104908/2023, dated 29.08.2023), the petition deserves to be allowed.

Ratio / Principle

The petition is allowed and disposed of in terms of the order passed by this Court in Sri. Chandrashekaraiah and Others vs. The State of Karnataka and Others, WP No.9721/2019 and connected cases dated 11.04.2023.

Key takeaways

The concerned respondents are directed to reimburse the GST amount indicated in the petitioner's representations at Annexures 'B' and 'B1' to 'B3' back to the petitioner, within a period of six weeks from the date of receipt of a copy of the order.ratio¶77

Detailed headnote1 paragraphs

GST reimbursement on works contracts – Contractor's writ petition under Article 226 seeking direction to respondents 2 to 4 (Karnataka Residential Education Institutions Society; Executive Engineer, PWD Hassan Division; Executive Engineer, University Engineering Division, Mysuru University) to reimburse differential GST amount per representations dated 22.06.2023 (Annexures 'B' and 'B1' to 'B3'), and a circular/policy from the State on GST payable on works contracts executed under VAT regime/old schedule of rates – Held: issue already answered by this Court in Sri. Chandrashekaraiah vs. State of Karnataka, WP No.9721/2019 and connected cases (dt. 11.04.2023) and by Co-ordinate Bench in Shri M.G. Arunkumar vs. State of Karnataka, WP No.104908/2023 (dt. 29.08.2023); petition allowed and disposed of in terms of the Chandrashekaraiah order; respondents to reimburse GST amount indicated in the representations within six weeks. Single Judge: S.R. Krishna Kumar J. Neutral citation: NC: 2025:KHC:10343.

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NC: 2025:KHC:10343 WP NO.11593 OF 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 11^TH DAY OF MARCH, 2025

BEFORE

THE HON'BLE MR. JUSTICE S.R. KRISHNA KUMAR

WRIT PETITION NO. 11593 OF 2024 (T-RES)

BETWEEN:

SRI. H. SHANKAR KUMAR S/O HANUME GOWDA, AGED ABOUT 52 YEARS HAVING OFFICE AT NO.1351, 2^ND CROSS, 6^TH BLOCK, H.M.T. LAYOUT, NAGASANDRA POST, BENGALURU - 560 073.

…PETITIONER

(BY MS. MONISH SEN, ADVOCATE FOR SRI. NAVEEN G.S., ADVOCATE)

AND:

Digitally signed by ARUNKUMAR M S Location: HIGH COURT OF KARNATAKA

STATE OF KARNATAKA DEPARTMENT OF FINANCE, 2^ND FLOOR, VIDHANA SOUDHA, DR. AMBEDKAR VEEDHI, BENGALURU - 560 001 REP. BY ITS ADDITIONAL CHIEF SECRETARY.

THE EXECUTIVE DIRECTOR, KARNATAKA RESIDENTIAL EDUCATION INSTITUTIONS SOCIETY, NO.8, MSB-1, 6^TH AND 7^TH FLOOR, CUNNINGHAM ROAD, BENGALURU - 560 022.

THE EXECUTIVE ENGINEER, PUBLIC WORKS DEPARTMENT, HASSAN DIVISION, HASSAN - 577 501.

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NC: 2025:KHC:10343 WP NO.11593 OF 2024

THE EXECUTIVE ENGINEER, UNIVERSITY ENGINEERING DIVISION, MYSURU UNIVERSITY, MYSURU - 570 005.

…RESPONDENTS

(BY SRI. HEMA KUMAR , AGA FOR R1 & R3; SRI. S. NAGAIAH, ADVOCATE FOR R2; SRI. T.P. RAJENDRA KUMAR SUNGAY, ADVOCATE FOR R4)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT THE RESPONDENTS 2 TO 4 TO REIMBURSE THE DIFFERENTIAL GST AMOUNT IN TERMS OF THE ORDERS OF THIS HON'BLE COURT IN WRIT PETITION NO.9721 OF 2019 FOR THE WORKS EXECUTED THE PETITIONER AS PER THE REPRESENTATIONS DATED 22.06.2023 VIDE ANNEXURES 'B' AND 'B1' TO 'B3'; DIRECT 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 PAID BY THE PETITIONER-CONTRACTOR TO THE GST DEPARTMENT; AND ETC.

THIS PETITION COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R. KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks for the following reliefs:

“(a) Issue a writ or such other order in the nature of mandamus directing the respondent-2 to 4 to reimburse the differential GST amount in terms of the orders of this Hon'ble Court in WP No.9721/2019 for the works executed the petitioner, as per the representations dated 22.06.23 and produced at Annexure-B, B-1 to B-3;

(b) Issue a writ or such other order directing the respondent No.1–State Govt, to issue a circular/policy to address the issue of payment of GST on works

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NC: 2025:KHC:10343 WP NO.11593 OF 2024

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 paid by the Petitioner-Contractor to the GST department.

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

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

the petitioner, Sri. Hema Kumar, learned Additional Government Advocate appearing for respondents 1 and 3; Sri. S. Nagaiah, learned counsel appearing for respondent No.2; and Sri. T.P. Rajendra Kumar Sungay, learned counsel appearing for the respondent No.4 and perused the material on record.

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 this Court in the case of SRI. CHANDRASHEKARAIAH AND OTHERS VS. THE STATE OF KARNATAKA - W.P.No.9721/2019 and connected cases dated 11.04.2023 , wherein it is held as under:

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

ORDER

(i) Petitions are hereby disposed of.

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NC: 2025:KHC:10343 WP NO.11593 OF 2024

(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 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.

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NC: 2025:KHC:10343 WP NO.11593 OF 2024

(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 postGST.

(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."

A Co-ordinate Bench of this Court in the case of SHRI.

M.G. ARUNKUMAR vs. THE STATE OF KARNATAKA AND

ANOTHER - WP.No.104908/2023 dated 29.08.2023 followed the

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NC: 2025:KHC:10343 WP NO.11593 OF 2024

aforesaid order and allowed the petition. The Co-ordinate Bench has held as follows:

"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 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:

ORDER

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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NC: 2025:KHC:10343 WP NO.11593 OF 2024

In the light of the issue having been answered by this

Court as well as a co-ordinate Bench of this Court (supra), the petition deserves to be allowed.

For the aforesaid reasons, the following:

O R D E R

i. The petition is allowed and disposed of in terms of the order passed by this Court in the case of SRI. CHANDRASHEKARAIAH AND OTHERS VS. THE STATE OF KARNATAKA AND OTHERS - WP.No.9721/2019 and connected cases dated 11.04.2023.

ii. The concerned respondents are hereby directed to reimburse GST amount as indicated in the representations at Annexures 'B' and 'B1' to 'B3' back to the petitioner, within a period of six weeks from the date of receipt of a copy of this order.

Sd/(S.R. KRISHNA KUMAR) JUDGE

ARK

List No.: 1 Sl No.: 57