TaxTMI 
TaxTMI 
2025 (7) TMI 2058
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....g to the case are as under: The captioned petition raises an issue touching upon the transitional tax implications due to the shift from pre-GST regime to the post-GST indirect tax framework. The dispute in the present case on hand concerns the liability for differential tax arising from the implementation of Goods and Service Tax Act, 2017 (hereinafter referred to as "GST Act") wherein the respondent No.2/Corporation had issued a work order one day prior to implementation of the GST Act. 3. Respondent No.2/Corporation while not disputing the execution of work has withheld the differential tax amount demanding a specific certificate from the jurisdictional GST authority, asserting that only upon such certification, the remaining tax c....
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....production of CA certificates, and audit reports is sufficient to establish discharge of GST liability? 9. Before this Court delves into the points on hand, this Court deems it fit to take cognizance of the directions issued by the Co-Ordinate Bench in the reported judgment rendered in the case of Chandrashekariah .vs. State of Karnataka [[2024] 158 taxmann.com 443(Karnataka)]. The directions have a significant bearing on the stand taken by the BBMP in the captioned petition. For easy reference, the same is culled out, which reads as under: "(i) Petitions are hereby disposed of. (ii) The Respondents-State and other Govt agencies/Respondents who have entered into works contract with the Petitioners are issued the followi....
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....re 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 em....
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.... partly under the GST regime. More importantly, the Court in the said decision has clarified that the tax component arising on the balance work executed post 1.7.2017 is to be subjected to GST, and wherever the revised GST-inclusive value exceeds the original contract value, the service recipient/employer is under a legal obligation to reimburse the differential tax to the contractor. 11. This legal position is reinforced by Section 142(10) of the Central Goods and Services Tax Act, 2017, which categorically provides that notwithstanding anything contained in the repealed laws, goods or services supplied after the appointed day (i.e., 01.07.2017) shall be liable to tax under the GST regime. Thus, even if the contract was entered into und....
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....s during the GST regime, did so with a legitimate expectation that the applicable taxes which had undergone a statutory shift from the earlier VAT/Service Tax regime to the GST regime would be reimbursed by the employer. Having reaped the benefits of the work executed by the contractor, the respondent-BBMP cannot now deny reimbursement on untenable technical grounds that lack statutory support. The refusal to release the differential tax amount, on the specious ground of absence of a departmental certificate, is not only contrary to statutory provisions but also amounts to arbitrary and unfair conduct on the part of a public authority. 14. In view of the foregoing, this Court finds that the entire burden of the differential tax arising o....