Facts of the Case

The petitioner, a registered Class-I Civil Contractor, was the successful bidder for road works under the PMGSY (NGNRY Phase III) scheme in the Karwar Project Division, and the respondent-Department issued a work order in his favour on 02.07.2015. After completing the works and receiving payment of the base contract value, the petitioner claimed that the respondent, being the service recipient, was liable to pay Goods and Services Tax at 12% on a bill amount of Rs.7,74,14,002/- and at 18% on a further bill amount of Rs.1,87,78,168/-, together amounting to Rs.1,26,69,750/-. Despite a representation dated 31.08.2023 (Annexure-C), the Department failed to reimburse the GST component. The petitioner accordingly filed this writ petition under Articles 226 and 227 seeking a mandamus directing the Executive Engineer to consider the representation and release the GST amount.

Issues Involved

  1. Whether the respondent-Department, as recipient of works-contract services, was liable to reimburse GST on the completed PMGSY works.
  2. Whether the Department's inaction on the petitioner's representation for GST reimbursement warranted a writ of mandamus.

Petitioner's Arguments

  • Having been awarded the work order in 2015 and having completed the works, the petitioner is entitled to GST reimbursement at 12% and 18% on the respective bill amounts, totalling Rs.1,26,69,750/-.
  • Despite a representation dated 31.08.2023, the respondent-Department has taken no action to reimburse the GST component, leaving the petitioner with no remedy except to approach the writ court.

Respondent's Arguments

  • No specific defence or opposition is recorded; the Additional Government Advocate appeared for the respondents, and the order does not record any denial of the liability to reimburse GST.

Court Order/Findings

  • The Court noted that the entire tender process and allocation of work occurred after the introduction of GST, and since the petitioner had completed the tender work, the respondent-Department, as service recipient, was under a “bounden duty” to reimburse the GST amount.
  • The Court held that the respondent-Department was statutorily obligated under Section 13 of the Central Goods and Services Tax Act, 2017 to reimburse GST paid by the contractor on completed works, and that its total inaction warranted issuance of mandamus.
  • The writ petition was allowed, and the respondent was directed to reimburse the GST amount indicated in the representation dated 31.08.2023.
  • The respondent-Department was directed to reimburse the amount within six weeks from the date of receipt of a copy of the order.

Important Clarification

  • A government department that is the recipient of works-contract services under a post-GST tender is statutorily bound to reimburse the GST component paid or payable by the contractor, and cannot withhold such reimbursement through administrative inaction.
  • Continued inaction on a contractor's representation for GST reimbursement, without any justification on record, is sufficient ground for a writ court to issue mandamus with a time-bound direction.
  • Since the tender and work order in this case both post-dated the introduction of GST, the contractor's obligation to charge GST and the Department's corresponding obligation to reimburse it were treated as two sides of the same statutory duty, not matters left to administrative discretion.

Sections Involved

  • Section 13, Central Goods and Services Tax Act, 2017 — deals with the time of supply of services and the resulting tax liability, relied upon by the Court to hold the Department bound to reimburse GST to the contractor.
  • Articles 226 and 227 of the Constitution of India — invoked by the petitioner to seek a writ of mandamus compelling the Department to honour its statutory reimbursement obligation.

Decision – In Favour of

Assessee/Petitioner (Contractor). The writ petition was allowed and the Department was directed to reimburse the full GST amount of Rs.1,26,69,750/- indicated in the petitioner's representation, within six weeks.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: Writ Petition No. 106344 of 2023 (GM-RES)
  • CNR: 2023:KHC-D:12447
  • Coram: Justice Sachin Shankar Magadum
  • Decision Date: 13.10.2023
  • Disposal Nature: Allowed

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