TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 939
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....pees three crores thirty-four lakhs sixty-two thousand and seventy-two and paise fifty only) towards the applicable GST payable by the respondent authorities as detailed by the petitioner in representations dated 26.12.2019 vide Annexure-D to D17 along with the accrued interest and penalty if any. ii. Issue a writ of mandamus directing the respondents No. 5 to 23 to the petitioner a sum of Rs. 43,34,555/- (Rupees forty three lakhs thirty four thousand five hundred and fifty five only) towards the applicable vat payable by the respondent authorities as per the assessment order passed by respondent No. 4 dated 12.11.2019 bearing No. DCCT/Audit-1/HBL/19-20/B vide Annexure-B and the accrued interest and penalty if any. iii. Issue a writ of mandamus directing respondent No. 4 from exempting the petitioner from either filing the monthly GST returns or paying the applicable GST thereon pending payment from the concerned authorities as per the representation dated 26.12.2019 vide Annexure-F. iv. Issue a writ of mandmaus directing respondent No. 4 to no to take any precipitative actions against the petitioners pending receipt of payment from respondent No. 5 to 23....
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.... 13. Subsequently, the State Government issued one more Circular dated 14.12.2020, which reads as under :- No: ED/212/FC2/2020 Finance Department (PC-2) KWB/ CAO/ AS2/ AMRUT/ GST/ 2020-21 Dated:14.12.2020 The proposal of the Administrative Department has been examined. Finance Department opines as follows: "Karnataka Urban Water Supply & Sewerage Board, Bangalore has sought clarification on GST calculation for works contract wherein agreements were executed prior to 01.07.2017 at old schedule rate., Generally the turnover related to the supply of goods or services or both effected before 01.07.2017 (appointed date of implementation of GST) should be taxed under the provisions of the earlier laws and not GST laws. Hence the portion of the contracts which are already executed earlier to 01.07.2017 must be taxed under the erstwhile Karnataka Value Added Tax Act and the Service Tax Act. This turnover, in addition to the certified works, also must include the turnover related to the uncertified works which are already executed but yet to be certified. Only that portion of the contract which are executed after the implementation of th....
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....yment at the petitioner's end of the applicable GST being statutory requirement has been made and the details of the payment are as per the table mentioned in Para 11 of the petition, which reads as under: Particulars Period Balance GST not paid to petitioner Renovation of swimming pool and operation From 14.07.2019 to 30.11.2019 Rs. 15,42,727 Rehabilitation of MG Park From 31.07.2019 to 04.08.200 Rs. 26,58,856 Total Rs. 42,01,582 4. The petitioner submits that after having paid the applicable GST, the petitioner has made representations on 01.08.2019 vide Annexure-'F' and 27.02.2020 vide Annexure-'H', whereby the petitioner has called upon the respondent to release the GST amount. The request of the petitioner was taken note of by the respondent authority which has sought for clarification from the Karnataka Urban Infrastructure Development and Finance Corporation ("KUIDFC", for short) as per their letter dated 06.12.2019. The specific clarification that was sought is as to whether GST is required to be made good to the contractor as it was only 5% of the VAT which was provided for in the contract. ....
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....ble relating to all taxes in post-GST regime has been taken note of. The methodology and impact of change of tax has also been referred to. This stand has been approved by the Additional Chief Secretary to Government, Finance Department. This clarification made in the context of an authority set up under a statute and taking note of the clarification made by the KUIDFC, the respondent is required to act in terms of the clarification made. 10. Further, insofar as tax component is concerned, as the contracts were entered after coming into force of the GST Act, and in light of the opinion expressed by a clarification made on 03.01.2020, the respondent is required to make good the GST after adjusting the amounts of sales tax that was provided for in the contract entered into between the petitioner and the respondent. 11. It is further to be noticed that the tax component is an independent component which the petitioner does not retain as a profit and is a statutory payment to be made. Looking into the nature of such payment of GST, the respondent is required to honour the same in terms of the clarification dated 03.01.2020. The consideration by the respondent to be ma....
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....usive work value for the Balance Work is less than the original agreement work value for the Balance Work, the payment the works contractor is to be reduced accordingly. In case excess payment has already been made to the works contractor in pursuance of the origin agreement, the excess amount paid must be recovered from the works contractor. (ix) These procedures shall be applicable to all works contract including those executed in EPC/Turnkey/Lumpsum mode. 16. So also, in the case of Subaya Construction's case supra, the Madras High Court held as under:- "When the Petitioners entered into an agreement with the Respondent-Board, the contract price comprise three components viz., cost factor, profit margin and tax component. There cannot be any contest regarding the cost factor and profit margin. The tax liability will have to borne by the Respondent-Board. The Respondents are directed to reworking terms of the contract and entered into a revised agreement with the Petitioners. The entire exercise shall be concluded within a period of 8 weeks from the date of receipt of copy of this order". 17. Similarly, in Bhagwati Constructions' case supra, th....
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.... structure till the date of completion of work or any error is noticed in the calculation of amount payable/recoverable till the release of Final Bill amount to contractor, the same shall be paid by the Railways or recovered from the contractor's bills/security deposit or any other dues of contractor with the Govt of India. 3.3 In case while awarding the contracts, the reasonability of rates was justified by Tender Committee considering the impact of CST, such compensation would not apply. 3.4 For neutralizing GST impact on the works contracts awarded before implementation of GST along with documentary evidence, the contractor should submit work sheet of tax liability before GST and after GST duly certified by chartered accountant engaged by him. The tax liability of the contractor before implementation of CST should be worked out taking into account all stipulated taxes in force before GST implementation i.e. Excise duty. VAT including VAT on Excise duty. Entry tax, Octroi duty, prevalent Service tax etc., irrespective of whether the same were actually paid by agency or not. 3.5 The rate reasonability and quantities of input materials for which ITC s....
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....ll stipulated taxes in force prior to the implementation of GST i.e., excise duty, VAT, including VAT on excise duty, entry tax, octroi duty, prevalent service tax etc, irrespective of whether the same were paid by the agency or not for the On Account/FCC Bills. 8.6 On receipt of the Account/Final contract certificate from the executive, the contractor shall submit the following documents (for the on Account/FCC to the Executive for the GST neutralization. a. The invoice (Bill) duly segregating the GST component from the gross amount of the work executed. This should contain details of GSTIN TIN & STRN numbers-state-wise (if he is working is more than one State alongwith the worksheet. b. A work sheet for the tax liabilities before GST and after GST, including the list of items for which the to put Tax Credit (ITC) is available for the work. A sample copy of the work sheet is given in the Annexure-B for general guidance. The details given in this worksheet and calculations should be duly certified by Statutory/Tax Auditor auditing books of the contractor. This worksheet shall be submitted for each of the bills, which may have already been passed as per pr....
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....he GST, submitted by the contractor, shall be recorded in the Measurement Book clearly showing- Tax liability before GST = Rs............. Tax liability after GST = Rs............. Difference =(+)/(-)= Rs............. The bill containing these details shall then be prepared as per the format given in Annexure-B and forwarded to Finance for security and prior vetting The contractors claim will then be admitted to the for passing of the Bill The difference in the tax liability before the GST and after the GST and after the GST shall be reimbursed to the contractor or recovered from the contractor as the case may be. 11. Recovery, if any, from the contractors may be regulated as per section 171 (1) of CGST Act 2017, i.e., any reduction in the rate of tax on any supply of goods or services or the benefit of the Input Tax Credit shall be passed on to the recipient (Railways) by way of a commensurate reduction in the prices. The executive will review all the agreements to ensure that recovery is done, wherever due. The recovery shall be effected from the on account bills on hand and if no account bills are pending the recovery shall be affecte....
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....reed to the GST neutralitiesin respect of such contract. Moreover, the writ-applicants have produced a certificate of the Chartered Accountant certifying that no GST-paid inputs have been used in the execution of the contract and, therefore, there was no input tax credit pertaining to this contract. Such facts are not in dispute. If that be so, then the writ-applicants are entitled to refund in terms of the order for the GST neutralization, issued by the Ministry of Railways read with the JPO and the supplementary agreement. In fact, it appears that this was also determined by the respondents themselves by generating a pay order in favour of the writ-applicants. 18. I find considerable force in the submission made by the learned Senior counsel for the petitioners 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; that 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 who are before this court where "works contract" were entered prior to 01.07.2017 during K....
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....s 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 postGST, 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 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....
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....e of M.G. Arunkumar vs. State of Karnataka & others - W.P.No. 104908/2023 dated 29.08.2023 as well as subsequently, in the case of Mycon Construction Ltd., vs. State of Karnataka - W.P.No.25439/2023 dated 19.02.2024 and M/s. Apoorva Construction Co., vs. State of Karnataka - W.P.No.28/2024 dated 19.02.2024, in which, this Court held as under:- "The petitioner is before this Court, seeking the following prayers: "(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. (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 lev....
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....ce 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 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 GS....
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....eed and the prayer that is sought for is to be allowed. 5. For the aforesaid reasons, the following: ORDER (i) The petition is allowed. (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. (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." 4. In view of the aforesaid facts and circumstances, the present petition also deserves to be allowed. 5. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The respondents are directed to reimburse the GST amounts as indicated in the petitioner's representations / letters at Annexures-M, M1 and M2 dated 18.08.2021, 13.09.2021 and 30.01.2023 respectively together with applicable interest within a period of four weeks from the date of receipt of a copy of this order." In W.P. No. 13167/2024: "1. Petitioners are said to be Class-I Civil Contractors involved in the business of undertaking civil works assign....
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....ii. The writ petition is disposed of." 4. In the order passed by this Court in W.P. 25439 of 2023 disposed on 16.09.2025, the contentions of the respondents are all taken note of and an order is passed. Identical contentions are projected in the case at hand including that of subsistence of an arbitration clause between the parties. The same being already considered by the Co-ordinate Bench in Writ Petition No.9721 of 2019 and connected cases, I deem it appropriate to follow suit and pass the same order as follows: ORDER (i) Writ petition is disposed of. (ii) The Respondents-State and other Govt agencies / Respondents who have entered into works contract with the petitioner 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 petitioner. (b) The payments received by the petitioner 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) D....