Facts of the Case

The petitioner, Shri M.G. Arunkumar, a registered Class-I civil contractor, was the successful bidder for a work order dated 24.03.2018 issued by the Deputy Commissioner, District Urban Development Cell, Chamarajanagar. After completing the work, he claimed the respondent Department, as service recipient, was liable to pay GST at 12% on the completed work value, amounting to Rs.2,16,51,903 on a base of Rs.18,04,32,523. Despite a representation dated 15.04.2023, the Department did not reimburse the GST amount, leading to the present writ petition seeking a mandamus.

Issues Involved

  1. Whether a government department, as the recipient of works-contract services under a post-GST-regime tender, is under a statutory duty to reimburse the GST amount to the registered contractor who has borne the tax liability.

Petitioner's Arguments

  • The entire tender process and work allocation was post the introduction of GST, and as the service recipient, the Department was bound under Section 13 of the CGST Act, 2017 to reimburse the GST amount on the completed work.
  • Despite representation and follow-up, the Department remained wholly inactive on the reimbursement claim.

Respondent's Arguments

  • No serious factual dispute was raised as to the quantum or the fact of the petitioner's GST liability; the challenge, if any, was to the maintainability of directing reimbursement without further process.

Court Order / Findings

  • It was undisputed that the entire tender process post-dated the introduction of GST, and that the petitioner, as a Class-I registered civil contractor rendering the service, was under a mandatory duty to pay GST to the Department.
  • Correspondingly, the Department, as the service recipient, was under a bounden duty to reimburse the GST amount to the petitioner in terms of Section 13 of the CGST Act, 2017, this being a statutory requirement rather than a discretionary matter.
  • Given the total inaction of the Department despite the petitioner's representation, the Court found it a fit case for issuance of mandamus.
  • The writ petition was allowed, and the respondent was directed to reimburse the GST amount of Rs.2,16,51,903 as indicated in the representation dated 15.04.2023, within six weeks from receipt of the order.

Important Clarification

Where a government department engages a registered contractor under a tender or work order issued after the introduction of GST, the department, as recipient of the taxable supply, is under a statutory obligation under Section 13 of the CGST Act to reimburse the GST component of the contract value to the contractor who has discharged the tax; prolonged departmental inaction on such a claim is a fit ground for issuance of a writ of mandamus without further adjudication being necessary.

Sections Involved

  • Section 13, CGST Act, 2017 – time of supply of services, underpinning the recipient's liability to bear and reimburse the GST component of a contract.

Decision – In Favour of

In favour of the Assessee/Contractor — mandamus was issued directing the government Department to reimburse the GST amount within six weeks.

Case Details

High Court of Karnataka, Dharwad Bench; Writ Petition No.104908 of 2023 (GM-RES); Coram: Hon'ble Mr. Justice Sachin Shankar Magadum; Order dated 29.08.2023; CNR: 2023:KHC-D:9630.

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