Facts of the Case

M/S Sweet Home Constructions and other contracting petitioners sought a direction from the Karnataka High Court compelling the State Government and the Chief Engineer, H and FWDEW, to refund the differential GST amount paid by them for works executed under contracts, as set out in their representations dated 21.11.2024. Their grievance was that the original work orders, issued before the GST regime came into force, did not factor in GST liability, yet with its introduction the petitioners were compelled to bear and pay GST on the same works without corresponding reimbursement from the employer-department.

Issues Involved

  1. Whether a government works-contract employer is obligated to reimburse GST that the contractor was statutorily required to pay but which was not contemplated at the time the original work order was issued.
  2. What procedural mechanism should govern verification and payment of such reimbursement claims.

Petitioner's Arguments

  • The petitioners submitted that since their work orders predated the GST regime, they had no option but to bear and remit GST out of pocket on works executed thereafter, and that this amount was legitimately recoverable from the employer-department as a pass-through cost.

Respondent's Arguments

  • The Additional Government Advocate accepted notice for the respondents; the order records no substantive dispute with the underlying principle that GST paid on such works is recoverable from the employer once documented.

Court Order / Findings

  • The Court held there could be no dispute that GST, once required to be paid by the contractor, was liable to be reimbursed by the employer-department.
  • It directed that if the petitioner furnishes all relevant documents regarding payment of the GST amount, the respondent-department would be required to reimburse the same.
  • Accordingly, the writ petition was allowed: the petitioner was permitted to furnish payment challans of the GST amount to the department within fifteen days, and the department was directed to consider and pass necessary orders on the payment challans within thirty days of receipt.

Important Clarification

  • Where a government works contract pre-dates the introduction of GST and did not price it in, the statutory tax burden a contractor is compelled to discharge is recoverable from the employer as a pass-through cost, subject only to producing proof of actual GST payment — the writ court will compel a time-bound departmental decision on such claims rather than leave contractors to civil litigation.

Sections Involved

  • Article 226 and 227, Constitution of India – writ jurisdiction invoked for a mandamus directing reimbursement.
  • Central Goods and Services Tax Act, 2017 (general reference) – GST liability on works contract services executed post-implementation of the Act.

Decision – In Favour of

Allowed; entirely in favour of the Assessee/Contractor, directing time-bound consideration and reimbursement of documented GST payments.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No. 33095 of 2025 (GM-RES)
  • Coram: Justice Suraj Govindaraj
  • Date of Order: 13.11.2025

Link to Download the Order

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