Facts of the Case

The petitioner, Shri Prabhakar S/o Rajendra Rao Kulkarni, a Class-I contractor from Bagalkot, filed eight connected writ petitions (WP Nos. 109381, 109370, 109372, 109382, 109386, 109390, 109392 and 109408 of 2025) against the Bagalkot Town Development Authority and the Karnataka Neeravari Nigam Limited, seeking mandamus directions to pay sums ranging from about Rs 5 lakh to Rs 21.6 lakh — aggregating to roughly Rs 86.99 lakh across the batch — towards differential GST, with 18% annual interest. The petitioner's works contracts, entered into under the pre-GST Karnataka VAT/Composition regime, straddled the introduction of GST from 01.07.2017, when such contracts came to be treated as 'deemed services' attracting GST at 18% (later 12%), creating a tax burden not contemplated when the contracts were originally priced.

Issues Involved

  1. Whether a contractor executing works contracts awarded during the pre-GST VAT regime, but partly performed after 01.07.2017, is entitled to reimbursement of the resulting differential GST liability from the government employer.

Petitioner's Arguments

  • The contracts were priced under the KVAT Act/Composition scheme, with no contemplation of the GST regime that took effect from 01.07.2017, under which works contracts became taxable as deemed services.
  • The issue stood squarely covered by a Coordinate Bench ruling in W.P. No. 9721/2019 and connected matters, decided 11.04.2023, and by State Government Circulars dated 03.01.2020 and 14.12.2020 prescribing the methodology for bifurcating pre- and post-GST tax liability on works contracts.

Respondent's Arguments

  • Learned counsel for both sets of respondents (Bagalkot Town Development Authority and Karnataka Neeravari Nigam Limited) did not seriously contest the applicability of the Coordinate Bench ruling, submitting in unison that the issue stood covered by that precedent.

Court Order / Findings

  • The Court extensively extracted the Coordinate Bench's ruling in W.P. No. 9721/2019, which examined State Government Circulars requiring bifurcated computation of tax liability for pre- and post-GST portions of works contracts and recognised the contractors' entitlement to reimbursement of the resulting differential.
  • Finding the present batch to be covered on all fours by that earlier ruling and on the same reasoning, the Court disposed of all eight connected writ petitions accordingly, directing reimbursement in line with the Coordinate Bench's methodology.

Important Clarification

  • Where a works contract straddles the 2017 VAT-to-GST transition, government departments and statutory bodies are expected to bifurcate the contract value into pre- and post-GST portions and reimburse the contractor for any resulting increase in tax burden on the post-GST portion, per the State's own circulars.
  • This line of Karnataka High Court authority — following Chandrashekariah and the Coordinate Bench ruling applied here — continues to be the reference point for GST differential reimbursement claims by works contractors against public bodies in the State.

Sections Involved

  • Section 142(10), CGST Act, 2017 – GST liability on supplies made on or after the appointed day irrespective of contract date.
  • Karnataka Value Added Tax Act, 2003 (KVAT Act) – pre-GST composition/regular tax regime for works contracts.

Decision – In Favour of

The decision is in favour of the assessee, Prabhakar Kulkarni — all eight connected writ petitions were disposed of, applying the Coordinate Bench ruling directing reimbursement of the differential GST.

Case Details

High Court of Karnataka, Dharwad Bench – WP No. 109381 of 2025 with WP Nos. 109370, 109372, 109382, 109386, 109390, 109392 & 109408 of 2025 – Neutral Citation: 2025:KHC-D:18210 – Coram: Hon'ble Mr. Justice M. Nagaprasanna – Order dated 15.12.2025.

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