Facts of the Case: The petitioners, S. Vinith Kumar and Mohan S., were civil contractors who had executed works contracts for various Executive Engineer divisions of the Cauvery Neeravari Nigama Limited (CNNL) and the Public Works Department in Mandya, Mysuru and Chamarajanagar districts. The tender process and allocation of these works occurred after the introduction of GST, obligating the petitioners as registered contractors to discharge GST on the work executed, while the employer-departments continued to release payments computed under the earlier VAT regime, leaving a differential tax burden on the contractors. The petitioners sought a mandamus directing the respondent departments to reimburse this differential GST amount pursuant to representations dated 10.06.2024 and 11.06.2024, and also sought a policy direction from the State Government to address the recurring issue for works contracts executed under the VAT regime rate schedule.

Issues Involved:

  1. Whether a government department that engaged a contractor post-GST implementation is obligated to reimburse the GST component over and above the contract value fixed under the erstwhile VAT-based Schedule of Rates.
  2. Whether the issue is squarely covered by the Court's earlier batch decision in Chandrashekaraiah v. State of Karnataka.

Petitioner's Arguments:

  • As a registered civil contractor who completed the tendered work after GST came into force, the respondent-departments, being service recipients, were under a statutory obligation under Section 13 of the CGST Act, 2017 to reimburse the GST amount actually discharged by the petitioners.
  • The issue was directly covered by the Court's decisions in Chandrashekaraiah & Others v. State of Karnataka (W.P. No. 9721/2019 and connected matters) and subsequent orders in M.G. Arunkumar, Mycon Construction Ltd. and M/s. Apoorva Construction Co., all granting reimbursement of the differential GST amount to similarly placed contractors.

Respondent's Arguments:

  • No substantial contest was raised distinguishing the petitioners' case from the batch of precedents cited; the matter proceeded on the basis that the controversy stood squarely covered by prior orders of the Court.

Court Order / Findings:

  • The Court found that the controversy was directly and squarely covered by Chandrashekaraiah (disposed of on 11.04.2023), which had laid down detailed guidelines for government departments to calculate pre-GST and post-GST work value, adjust for KVAT and GST components, and reimburse contractors the differential tax amount where the GST-inclusive work value exceeds the original agreement value.
  • Relying also on the subsequent orders in M.G. Arunkumar and Apoorva Construction Co., which had similarly directed reimbursement, the Court allowed the petition and directed the respondents to reimburse the GST amounts indicated in the petitioner's representations dated 10.06.2024 and 11.06.2024, together with applicable interest, within four weeks.

Important Clarification:

  • Where a works contract tender is finalised and executed after the appointed date for GST, the employer department — being the recipient of the service — is under a statutory duty under Section 13 of the CGST Act to reimburse the GST discharged by the contractor over and above the VAT-based contract value; courts have consistently directed such reimbursement following the Chandrashekaraiah framework rather than requiring contractors to absorb the tax differential.

Sections Involved:

  • Section 13, CGST Act, 2017 — time of supply of services and the recipient's liability to discharge and reimburse GST.
  • Guidelines from the Chandrashekaraiah batch order governing transition of works-contract payments from KVAT to GST.

Decision – In Favour of: Assessee/Petitioner (contractor).

Case Details: High Court of Karnataka at Bengaluru; Writ Petition No. 33994 of 2024 (T-RES); Neutral Citation 2025:KHC:53010; Coram: Hon'ble Mr. Justice S.R. Krishna Kumar; Date of Order: 12th December, 2025.

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