The Karnataka High Court (Bengaluru Bench) held that the Petitioner, a major contender in the Civil and Industrial Construction business, being similarly circumstanced, is entitled to the same relief that is granted by the co-ordinate bench of this court in WP.No.9721/2019, disposed on April 11, 2023, and WP.No.104908/2023, disposed on August 29, 2023.
The Court clarified that a supplementary agreement may be signed with the petitioner 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.
The Court also pointed out that 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. For this, the Court emphasized that the Respondent-State and other Government agencies /Respondents who have entered into a works contract have been issued guidelines, and accordingly, directed the petitioner to submit comprehensive representations to the respective employers/Respondents.
A Single Judge Bench of Justice M. Nagaprasanna observed that the tax component is an independent component, which the petitioners do not retain as a profit, and is a statutory payment to be made. Looking into the nature of such payment of GST, the respondents/employers are required to honour the same after determining the differential tax burden, especially for the Petitioners, where a “works contract” was entered during the KVAT regime and works are completed pre-GST.
The Bench elaborated that when payments are made post-GST or Contracts entered before July 01, 2017, but partly executed pre-GST, and the balance work executed post-GST, or Contracts for which tenders were invited during the KVAT regime and finalised after July 01, 2017, under the GST regime, or contracts which were invited during the KVAT regime under the old schedule of rates (SR) but finalised under GST regime, then a certain procedure is required to be followed to determine the amount payable by or to the works contractors/Petitioners.
Briefly, the issue in the lis is concerning the refund of GST, where the controversy is, what schedule of rates is made applicable in the contracts entered into between the petitioner and the statutory departments. The petitioner submitted that the contracts, though were entered into at a later point of time i.e. after the regime of the GST, they were at the old scheduled rates under the KVAT regime, which is disputed by respondents contending that the schedule of rates were changed in February 2018 and, therefore, the contract was entered into after the change in schedule of rates. The Respondents alleged that the petitioner has no right to seek a refund on the strength of what was projected before the Court.
Appearances:
Senior Advocate D R Ravishankar and Advocate Naveen G S, for the Petitioner/ Taxpayer
AGA M Rajakumar and Advocate Dakshina Murthy, for the Respondent/ Revenue
