Facts of the Case

The petitioner, engaged in works contracts (road works, drains, etc.) executed for the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), a Government entity, was assessed to GST at 18% on such contracts under an order in Form GST DRC-07 dated 12.03.2025 for tax periods 2021-22 and 2022-23. The petitioner contended that the correct rate, per Notification No. 11/2017-Central Tax (Rate) as amended by Notifications 20/2017 and 24/2017-Central Tax (Rate), was lower up to 31.12.2021, and sought a direction that APIIC pay the differential rate of tax with interest, either to the petitioner (to enable payment to the Department) or directly to the Department's account.

Issues Involved

  1. Whether the GST assessment at 18% on the works contracts executed for APIIC was correct, or whether a lower concessional rate applied for the period up to 31.12.2021.
  2. If the 18% rate is correct/affirmed, whether APIIC, the government entity for whom the works were executed, should bear and pay the differential tax to enable the petitioner to remit it to the Department.

Petitioner's Arguments

  • The 18% GST levy on works contracts executed for APIIC up to 31.12.2021 was contrary to Notification No. 11/2017-Central Tax (Rate) as amended, and the correct differential rate (6% lower) ought to have been applied.
  • Alternatively, if the 18% rate was upheld, APIIC as the government entity for whom the work was performed should be directed to pay the differential 6% tax with interest to the petitioner or directly to the Department.

Respondent's Arguments

  • The standing counsel for APIIC (Respondent No. 4) submitted that there were disputes as to the actual amount of tax already paid and whether such payments would cover the differential amount payable under any order that may be passed.

Court Order / Findings

  • The Court noted that the issue raised in the present writ petition had already been decided by an earlier order dated 24.07.2024 in W.P.No.22663 of 2023.
  • Following that judgment, the writ petition was disposed of by affirming the order of assessment at 18% GST.
  • However, a direction was issued to APIIC to pay the differential amount of taxes for the assessment periods covered under the impugned order to the petitioner, to enable the petitioner to pass on such tax to the Commercial Tax Department, to be cleared within two months.
  • Given the dispute flagged by APIIC's counsel regarding amounts already paid, APIIC was directed to set out, within one week, details of payments already made to the petitioner and the balance amount payable on account of the differential rate, with liberty to the petitioner to reconcile the figures and, if disputes persisted, to avail remedies under law for finalisation of amounts payable.
  • The admitted amount of differential tax was directed to be paid by APIIC within two months.

Important Clarification

  • Where the correctness of a GST rate applied to a government works contract is already settled by an earlier coordinate ruling of the same court, subsequent writ petitions on identical facts will ordinarily be disposed of by affirming the assessment rather than re-examining the classification/rate question afresh.
  • In such pass-through tax disputes involving a government contractee, courts commonly direct the contractee (here APIIC) to pay the differential tax component to the contractor within a fixed timeframe, while leaving reconciliation of already-paid amounts to be worked out between the parties, with recourse to legal remedies if disputes persist.

Sections Involved

  • Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 20/2017-Central Tax (Rate) and Notification No. 24/2017-Central Tax (Rate) – prescribe the applicable GST rate on works contract services for government entities, central to the rate dispute.
  • Form GST DRC-07 – summary assessment order impugned in the petition.

Decision – In Favour of

The petition is disposed of largely in favour of the Department on the rate question (18% GST affirmed), with a procedural direction favouring the Assessee for recovery of the differential tax component from APIIC.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 16314 of 2025
  • Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice T.C.D. Sekhar
  • Date of Order: 01.12.2025

Link to Download the Order

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