Contractor wins refund of differential GST paid on pre-July 2017 works contracts under KVAT regime

The Karnataka HC ruled in favor of the petitioner contractor seeking refund of differential GST amount paid on works contracts. The court followed precedent from a coordinate bench decision involving multiple construction companies, holding that pre-GST payments for works executed before July 1, 2017 should be assessed under KVAT tax regime. The court directed respondent department to reimburse the GST differential amount within six weeks of receiving the order copy. The petition was allowed with the contractor entitled to refund of excess tax paid.

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Issues:
1. Refund of differential GST amount paid by the petitioner for works contract/composite supply.
2. Issuance of circular/policy by the State Govt addressing GST payment on works contract.
3. Compliance with directions/guidelines for assessment of works executed pre-GST and post-GST.

Analysis:
1. The petitioner sought a writ mandamus for the refund of the differential GST amount paid for works contract/composite supply. The Co-ordinate Bench directed the State and other Govt agencies to calculate works executed pre-GST under KVAT regime, assess payments received pre-GST, calculate balance works post-GST, derive rates of materials, deduct KVAT amount, add applicable GST, and set off input credit against output GST. The concerned department was instructed to decide if agreements needed to be changed based on tax difference, sign supplementary agreements for revised GST-inclusive work value, and reimburse the petitioner for any differential tax amount.

2. Additionally, the petitioner requested a circular/policy from the State Govt addressing GST payment on works contract executed under VAT regime. The Co-ordinate Bench reserved liberty for the petitioners to challenge subsequent orders or decisions by authorities and take legal recourse as necessary. The GST authorities were directed not to take precipitative action against the petitioners for six months from the date of the order.

3. Another Co-ordinate Bench allowed a petition where the respondent Department was directed to reimburse a specific GST amount to the petitioner within six weeks. The Court emphasized the mandatory duty of the Department to reimburse GST amounts to contractors who have completed tender works post-GST implementation. The judgment highlighted the statutory obligation for service recipients to reimburse GST amounts to contractors, ensuring compliance with Section 13 of The Central Goods and Services Tax Act, 2017. The Court issued a writ mandamus for the reimbursement of the specified GST amount as per the representation provided by the petitioner.

This detailed analysis of the judgment showcases the legal intricacies involved in seeking refunds of GST amounts, issuance of circulars/policies by the State Govt, and compliance with directions/guidelines for assessment of works executed pre and post-GST.

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