Differential GST Reimbursement: Karnataka High Court Sets Formula for Transition of Ongoing Works Contracts (KVAT to GST)
ISSUE
How should the tax liability be determined for Government works contracts executed during the transition period (pre and post-01.07.2017), and is the contractor entitled to reimbursement/refund of the differential tax burden caused by the shift from KVAT to the GST regime?
FACTS
The Contract: The assessee (Government Contractor) had executed works contracts for the Government/Respondents.
The Transition: The contracts spanned across the GST implementation date (01-07-2017). Some works were executed under the pre-GST regime, but payments were received post-GST.
The Dispute: The assessee faced a higher tax burden due to the change in regime and sought reimbursement of the “differential tax amount” from the Government authority.
HELD
The High Court laid down a specific mechanism for splitting the liability and calculating the reimbursement:
Works Executed Prior to 01-07-2017 (Pre-GST):
These must be assessed strictly under the KVAT (Karnataka Value Added Tax) regime.
Even if the payment is received after 01-07-2017, the tax liability remains under KVAT/Service Tax, not GST.
Works Executed After 01-07-2017 (Post-GST):
The balance work must be calculated based on the original contract rates.
The Formula:
Identify the materials required/used for the balance work.
Deduct the KVAT and Service Tax component embedded in those rates (as per the pre-GST era).
Add the applicable GST on those items.
Set off Input Tax Credit (ITC) available on materials against the output GST liability.
Determination of Differential Tax:
The authority must calculate the “Tax Difference” (New GST Liability minus Old KVAT/Service Tax Liability) for the balance works.
If the Revised GST-Inclusive Value > Original Agreement Value, the Government/Employer must reimburse/pay the differential amount to the contractor.
Procedural Requirement:
A Supplementary Agreement may be signed to reflect the revised GST-inclusive value for the balance works.
The Assessee is directed to submit detailed representations to the respective employers with these calculations.
VERDICT
The Writ Petition was allowed. The authorities were directed to calculate and reimburse the differential tax. [In Favour of Assessee]
KEY TAKEAWAYS
The “Cut-Off” Rule: There is no “flat rate” application. You cannot apply GST to work completed before July 1, 2017, even if the bill is raised later. Those portions must be taxed under VAT.
De-loading is Mandatory: For works after July 1, 2017, you cannot simply add 18% GST to the old contract price. You must first “de-load” (subtract) the old VAT (e.g., 5.5% or 14.5%) and Service Tax, and then add the GST. If you don’t de-load, the Government will reject your claim for “unjust enrichment.”
Supplementary Agreement: Contractors should insist on signing a supplementary agreement for the balance work to legally formalize the new GST-inclusive rates.
| “i. | Issue a writ of mandamus directing the respondents No.5 to 23 to the petitioner a sum of Rs.3,34,62,072.50/- (Rupees three crores thirty-four lakhs sixty-two thousand and seventy-two and paise fifty only) towards the applicable GST payable by the respondent authorities as detailed by the petitioner in representations dated 26.12.2019 vide Annexure-D to D17 along with the accrued interest and penalty if any. |
| ii. | Issue a writ of mandamus directing the respondents No.5 to 23 to the petitioner a sum of Rs.43,34,555/- (Rupees forty three lakhs thirty four thousand five hundred and fifty five only) towards the applicable vat payable by the respondent authorities as per the assessment order passed by respondent no.4 dated 12.11.2019 bearing No.DCCT/Audit-1/HBL/19-20/B vide Annexure-B and the accrued interest and penalty if any. |
| iii. | Issue a writ of mandamus directing respondent No.4 from exempting the petitioner from either filing the monthly GST returns or paying the applicable GST thereon pending payment from the concerned authorities as per the representation dated 26.12.2019 vide Annexure-F. |
| iv. | Issue a writ of mandmaus directing respondent No.4 to no to take any precipitative actions against the petitioners pending receipt of payment from respondent No.5 to 23 authorities pursuant to the assessment order passed by respondent No.4 dated 12.11.2019 bearing No.DCCT/Audit-1/HBL/19-20/b vide Annexure-B. |
| V. | Pass any other orders as this Hon’ble Court may deem fit in the interests of justice and equity.” |
“With reference to the above, your request for clarification on Tax calculation for the pre- GST period and post-GST period in the running bills of works has been examined by the GM (PF), KUIDFC and has suggested the following procedure for calculating Taxes for pre-GST period and post-CST period as follows:
1. Calculate the balance works to be completed in the original contract.
2. Derive the rate of materials, KVAT items required to complete the balance works.
3. Deduct the “KVAT” amount from those materials and the service tax also.
4. Add the applicable “GST” on those items.
5. Input Credit on the materials is to be arrived at and to be set at against the output GST (Billed to the Smart City) In this regard, a copy of the detailed report submitted by the Consultants M/s.S.R.& M.R. Associated, Chartered Accountants to KUIDFC on goods & service tax matters is enclosed herewith for your reference and further action in the matter.”
” The petitioner has sought for issuance of an appropriate writ to the respondent to reimburse GST amount of Rs.42,01,582/- to the petitioner and has sought for directions for payment of interest on tax dues at 18% per annum being the statutory interest rate chargeable under Section 50 of the CGST Act, 2017.
2. The petitioner submits that the respondent authority had invited bids pursuant to floating of tender and the petitioner was awarded the contract. It is further submitted that the rates that were finalised as per the bid documents included sales tax component @ 5%. It is to be noted that the tender and work orders were allotted to the petitioner on 07.12.2018 and 29.12.2018 which is admittedly after coming into force of the Goods and Services Act (“the GST Act”, for short).
3. The petitioner submits that necessary payment at the petitioner’s end of the applicable GST being statutory requirement has been made and the details of the payment are as per the table mentioned in Para 11 of the petition, which reads as under:
| Particulars | Period | Balance GST not paid to petitioner |
| Renovation of swimming pool and operation | From 14.07.2019 to 30.11.2019 | Rs.15,42,727 |
| Rehabilitation of MG Park | From 31.07.2019 to 04.08.200 | Rs.26,58,856 |
| Total | Rs.42,01,582 |
4. The petitioner submits that after having paid the applicable GST, the petitioner has made representations on 01.08.2019 vide Annexure-‘F’ and 27.02.2020 vide Annexure-‘H’, whereby the petitioner has called upon the respondent to release the GST amount. The request of the petitioner was taken note of by the respondent authority which has sought for clarification from the Karnataka Urban Infrastructure Development and Finance Corporation (“KUIDFC”, for short) as per their letter dated 06.12.2019. The specific clarification that was sought is as to whether GST is required to be made good to the contractor as it was only 5% of the VAT which was provided for in the contract.
5. The KUIDFC by their communication dated 03.01.2020 has opined as follows:
“With reference to the above, your request for clarification on Tax calculation for the pre-GST period and post-GST period in the running bills of works has been examined by the GM (PF), KUIDFC and has suggested the following procedure for calculating Taxes for pre-GST period and post-GST period as follows:
1. Calculate the balance works to be completed in the original contract.
2. Derive the rate of materials, KVAT items required to comp lete the balance works.
3. Deduct the “KVAT” amount from those materials and the service tax also.
4. Add the applicable “GST” on those items.
5. Input Credit on the materials is to be arrived at and to be set at against the output GST (Billed to the Smart City) In this regard, a copy of the detailed report submitted by the Consultants M/s.S.R. & M.R. Associated, Chartered Accountants to KUIDFC on goods & service tax matters is enclosed herewith for your reference and further action in the matter.”
6. It is not in dispute that the respondent authority had sought for clarification from KUIDFC, communication has been made out to the respondent authority as per the letter dated 03.01.2020 in terms as noticed above.
7. Various other contentions are raised including that the contracts have a dispute resolution clause and accordingly, any dispute relating to the rates or as regards to the assertion of the petitioner that GST paid by him is required to be made good, is a matter to be referred in terms of the dispute resolution clause. However, the petition could be disposed off without recording any finding on such contention.
8. It is to be noticed that clarification on 03.01.2020 by the KUIDFC is clear.
9. The Karnataka Urban Water Supply and Sewerage Board had sought for a clarification relating to implementation of GST in relation to performance of portions of contract after coming into force of GST. The Finance Department by its clarification dated 14.12.2020 has also opined that the tax difference ought to be calculated on each of the works and necessary steps to be taken to decide as to whether contract agreement needs to be changed. While making such clarification, the nature of reconciliation of tax paid in the pre-GST regime as well as taxes as applicable relating to all taxes in post-GST regime has been taken note of. The methodology and impact of change of tax has also been referred to. This stand has been approved by the Additional Chief Secretary to Government, Finance Department. This clarification made in the context of an authority set up under a statute and taking note of the clarification made by the KUIDFC, the respondent is required to act in terms of the clarification made.
10. Further, insofar as tax component is concerned, as the contracts were entered after coming into force of the GST Act, and in light of the opinion expressed by a clarification made on 03.01.2020, the respondent is required to make good the GST after adjusting the amounts of sales tax that was provided for in the contract entered into between the petitioner and the respondent.
11. It is further to be noticed that the tax component is an independent component which the petitioner does not retain as a profit and is a statutory payment to be made. Looking into the nature of such payment of GST, the respondent is required to honour the same in terms of the clarification dated 03.01.2020. The consideration by the respondent to be made within a period of not later than twelve weeks from the date of release of the order.
12. Accordingly, the petition is disposed off.”
3. In case of work, where the tender was invited before 01.07.2017 on the basis of SOR-2014, but payments made for balance work or full work after implementation of GST, the following procedure shall be followed to determine the amount payable to the works contractor;
(i) Item-wise quantity of work done after 30.06.2017 (i.e. the Balance Work) an its work value as per the original agreement basing on the pre-revised SoR 2014 is to be ascertained first.
(ii) The revised estimated work value for the Balance Work is to be determines 2014 is to be ascertained first. as per the Revised SoR-2014. (In case of rates of any goods or service used in execution of the balance Work not covered in the Revised SoR-2014, the tax exclusive basic value of that goods or service shall be determined by removing the embedded tax incidences of VAT, Entry Tax, Excise Duty, Service Tax, from the estimated Price/Quoted Price.)n
(iii) The revised estimated work value for the Balance Work shall then be enhanced or reduced in the same proportion as that of the tender premium/discount.
(iv) Finally, the applicable GST rate (5%, 12%, or 18% as the case may be) is to be added on the revised estimated work value for the Balance Work to arrive at the GST-inclusive work value for the Balance Work.
(v) A model format for calculation of the GST-inclusive work value for the Balance Work is attached as Annexure. The competent authority responsible for making payment to the works contractor will determine GST inclusive work value for the Balance Work for which agreement executed on the basis of SoR-2014.
(vi) A supplementary agreement shall be signed with the works contractor for the revised GST-inclusive work value for the Balance Work as determines above.
(vii) In case the revised GST-inclusive work value for the Balance Work is more than the original agreement work value for the Balance Work, the works contractor is to be reimbursed for the excess amount.
(viii) In case the revised GST-inclusive work value for the Balance Work is less than the original agreement work value for the Balance Work, the payment the works contractor is to be reduced accordingly. In case excess payment has already been made to the works contractor in pursuance of the origin agreement, the excess amount paid must be recovered from the works contractor.
(ix) These procedures shall be applicable to all works contract including those executed in EPC/Turnkey/Lumpsum mode.
“When the Petitioners entered into an agreement with the Respondent-Board, the contract price comprise three components viz., cost factor, profit margin and tax component. There cannot be any contest regarding the cost factor and profit margin. The tax liability will have to borne by the Respondent-Board. The Respondents are directed to reworking terms of the contract and entered into a revised agreement with the Petitioners. The entire exercise shall be concluded within a period of 8 weeks from the date of receipt of copy of this order”.
To
As per list attached
Sub: Impact of GST on Existing Works Contracts
1. Ministry of Railways have received a number of representations from Zonal Railways, railway contractors and contractors associations with a request that the increased tax liability due to implementation of GST should be borne by railways in works contracts awarded before implementation of GST. The issue was under consideration of Board for some time. It is seen that the impact of GST varies, depending upon the type of work, business model adopted by contractor and also on the state in which these works are being carried out. The impact is much more in labour intensive works like P. Way linking. Earthwork etc.
2. Considering the above, it has been decided to make existing works contracts awarded before implementation of GST, as GST neutral after carefully taking into account the input tax credit available to the contractor, on a case to case basis, on production of documentary evidence. This exercise may involve reimbursement to contractors or recovery from contractors depending upon the tax liability of the contractor before GST and after GST including input tax credit available to the contractor after GST.
3. Zonal Roadways/production Units may therefore work out modalities through a procedure order with the approval of General Manager is consultation with Principal Financial Advisor & legal cell. Following should be kept in view while framing the procedure order
3.1 For dealing with impact of GST is individual contracts, a supplementary agreement is to be entered in to with the contractor in consultation with financial advisor in terms of Para 1265 of the Engineering Code.
3.2 A clause is to be added in the supplementary agreement to state that in case there is any further change in the GST tax structure till the date of completion of work or any error is noticed in the calculation of amount payable/recoverable till the release of Final Bill amount to contractor, the same shall be paid by the Railwaysor recovered from the contractor’s bills/security deposit or any other dues of contractor with the Govt of India.
3.3 In case while awarding the contracts, the reasonability of rates was justified by Tender Committee considering the impact of CST, such compensation would not apply.
3.4 For neutralizing GST impact on the works contracts awarded before implementation of GST along with documentary evidence, the contractor should submit work sheet of tax liability before GST and after GST duly certified by chartered accountant engaged by him. The tax liability of the contractor before implementation of CST should be worked out taking into account all stipulated taxes in force before GST implementation i.e. Excise duty. VAT including VAT on Excise duty. Entry tax, Octroi duty, prevalent Service tax etc., irrespective of whether the same were actually paid by agency or not.
3.5 The rate reasonability and quantities of input materials for which ITC shall be available to the contractor, should be ensured by the executive with due care in consultation with associate finance.
3.6 Sample post checks of the compensation made to the contractor may be got undertaken by the GST consultant engaged by the Zonal Railways/production Units.
3.7 Recovery, if any, which is required to be done from the contractors, may be regulated as per Section 171(1) of CGST Act 2017.
4. This is issued with the approval of Board (ME, FC, CRB)
“4. The review for GST neutrality is to be done on a case to case basis on the production of various detailed outin the following paragraphs of the JPO
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8. Procedure to be followed for GST neutralization:
8.1 In accordance with the Railway Board’s letter dated 27.10.2017 all contracts awarded prior to at 01.07:2017 and all such contracts for which tenders were opened prior to 01.07.2017 but finalized after the implementation of GST are to be considered for GST neutralization. However, if any of the tender has been finalized duly considering the impact of GST. then such contract will not be eligible for the proposed GST neutralization
8.2 For dealing with the impact of GST in individual contract, a Supplementary (Subsidiary) agreement is to be entered into by the Executive, with the contractor, duly vetted by Finance, in terms of Para 1265 of the Indian Railway Engineering Code A Supplementary agreement is to be signed by the Original Agreement Signing Authority or by the Authority delegated such powers (Proforma for the agreement is given in Annexure-A).
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8.5 The contractor shall submit a work sheet for On Account/FCC bills for assessing the tax liability before andafter GST including the input tax credit available to the contractor. This shall be duly certified by the Statutory/Tax Auditor auditing the books of the contractor. The tax liability of the Contractor before implementation of GST should be worked out taking into account all stipulated taxes in force prior to the implementation of GST i.e., excise duty, VAT, including VAT on excise duty, entry tax, octroi duty, prevalent service tax etc, irrespective of whether the same were paid by the agency or not for the On Account/FCC Bills.
8.6 On receipt of the Account/Final contract certificate from the executive, the contractor shall submit the following documents (for the on Account/FCC to the Executive for the GST neutralization.
a. The invoice (Bill) duly segregating the GST component from the gross amount of the work executed. This should contain details of GSTIN TIN & STRN numbers-state-wise (if he is working is more than one State alongwith the worksheet.
b. A work sheet for the tax liabilities before GST and after GST, including the list of items for which the to put Tax Credit (ITC) is available for the work. A sample copy of the work sheet is given in the Annexure-B for general guidance. The details given in this worksheet and calculations should be duly certified by Statutory/Tax Auditor auditing books of the contractor. This worksheet shall be submitted for each of the bills, which may have already been passed as per provision of para 15 of this JPO and also for all other bills being processed after the notification of the GST for the contracts falling in the categories in para 1(i) & (iii)and HO GST rates as applicable at the time of actual passing of bills will be adopted.
The worksheet shall contain details of the quantities of all input materials/services procured for the particularwork/works. The contractor shall also certify that the invoices submitted for the work have not been/will not be used for any other work to claim Input Tax Credit (ITC)/refund. The contractor shall also give a certificate thatno refund claims of GST are pending settlement with the GST authorities.
At the Railway end, the component of input materials/services for SOR/USSOR items will be checked with reference to the rate analysis available in the SOR/USSOR for NS items, the executive officer will carry out a detained rate analysis considering the input materials/services required for executing the NS item which will be approved by JAG/Senior Scale (independent charge)
c. The contractor shall, for the On Account/FCC bills, shall submit all the original Tax Invoices for all the inputmaterial/services procured for the particular work, enfaced with agreement number, in support of the ITC and thesame shall be duly certified by the Statutory/Tax Auditor auditing the books of the contractor.
d. The tax liability of the Contractor, before implementation of GST, shall be worked out for On Account/pCC billstaking into account all stipulated taxes in force before the GST implementation i.e., excise duty. VAT, includingVAT on Excise duty, entry tax, octroi duty, prevalent service tax etc. Irrespective of whether the same were paidby the agency or not.
e. In case the contractor has procured material from unregistered vendors/suppliers the details of suchprocurement should be included in worksheet
f. The contractor shall submit copies of GST returns GSTRI, GSTR2, GSTR3, GSTR3, etc. as available on GSTNetwork from time to time.
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10. The difference of bill amount arrived at as per the old taxes (before GST) and GST, duly considering the ITC certified by the Statutory/Tax Auditor auditing the books of the contractor, shall be checked by the Executive. The tax liability of the contractor before and after implementation of the GST, submitted by the contractor, shall be recorded in the Measurement Book clearly showing—
Tax liability before GST =”Rs..
Tax liability after GST =”Rs..
Difference =(+)/(-)=”Rs..
The bill containing these details shall then be prepared as per the format given in Annexure-B and forwarded to Finance for security and prior vetting The contractors claim will then be admitted to the for passing of the Bill The difference in the tax liability before the GST and after the GST and after the GST shall be reimbursed to the contractor or recovered from the contractor as the case may be.
11. Recovery, if any, from the contractors may be regulated as per section 171 (1) of CGST Act 2017, i.e., any reduction in the rate of tax on any supply of goods or services or the benefit of the Input Tax Credit shall be passed on to the recipient (Railways) by way of a commensurate reduction in the prices. The executive will review all the agreements to ensure that recovery is done, wherever due. The recovery shall be effected from the on account bills on hand and if no accountbills are pending the recovery shall be affected from the final bill/security deposit or any other dues.
(a) The calculation of the GST neutralization is envisaged separately for each contract.
(b) A supplementary agreement is to be entered into by the Railways with the contractor for the purpose of GST neutralization.
(c) The details of the input tax credit are to be provided by the contractor in respect of the input materials used for a particular work.
(d) Reimbursement/refund is to be granted for differential tax liability taking into account for pre-GST and the postGST tax liability. If at all the post-CST liability for a particular contract is lower than the pre-GST liability, then the amount can also be recovered from the contractor.
| (i) | Petitions are hereby disposed of. |
| (ii) | The Respondents-State and other Govt agencies / Respondents who have entered into works contract with the Petitioners are issued the following directions / guidelines:- |
| (a) | Calculate the works executed pre-GST (prior to 01.07.2017) under KVAT regime and payments received by the Petitioners. |
| (b) | The payments received by the Petitioners preGST for such of the works executed before 01.07.2017 are to be assessed under KVAT tax regime – either under COT or VAT scheme as applicable. |
| (c) | Calculate the balance works to be completed or completed after 01.07.2017, in the original contract. |
| (d) | Derive the rate of materials, KVAT items required or used to complete the balance works. |
| (e) | Deduct the “KVAT” amount from those materials and the service tax, if applicable. |
| (f) | Add the applicable “GST” on those items. |
| (g) | Input Credit on the materials is to be arrived at and be set off as against the output GST, for those assessed under regular VAT. |
| (h) | Further, the “tax difference” should be calculated on such balance works executed or to be executed after 01.07.2017 separately. |
| (i) | Based on the result obtained on calculation of the tax difference on the contract value, concerned department/authority has to decide whether agreement needs to be changed or not. |
| (j) | A supplementary agreement may be signed with the Petitioners for the revised GST-inclusive work value for the Balance Work completed or to be completed as determined above and in case the revised GST-inclusive work value for the Balance Work, completed or to be completed after 01.07.2017, is more than the original agreement work value, the Petitioners are to be paid /reimbursed, as the case may be, the differential tax amount by the concerned employer; so also, in case payments for works completed pre-GST are made postGST, the concerned employer has to pay or reimburse, as the case may be, the differential tax amount, to the Petitioners. |
| (iii) | Petitioners are directed to submit comprehensive representations to the respective employers/Respondents within a period of 4 weeks from the date of receipt of a copy of this order, irrespective of whether they have completed the works pre-GST or postGST or payments were received or yet to be received post-GST. |
| (iv) | If such representations are submitted, the respective employers/Respondents are directed to consider and dispose of the same in the light of the aforesaid directions / guidelines as expeditiously as possible and at any rate within a period of 8 weeks from the date of submission of the representations. |
| (v) | In view of the interim orders passed by this Court in the present petitions, such of the petitioners who had not filed their GST returns during the period after 01.07.2017 are permitted to file their returns / amended returns, pursuant to the calculation of the differential tax as per procedure above under GST regime, without insisting on interest or penalty or limitation. |
| (vi) | The GST authorities are also directed not to take precipitative action against the Petitioners for a period of 6 months from the date of receipt of a copy of this order. |
| (vii) | Liberty is reserved in favour of the petitioners to challenge any order / decision passed / taken by the respondents or the authorities, subsequent to this order and also take recourse to such remedies as available in law. |
” (a) Issue a writ of mandamus or any other writ or direction or order to the Respondents to reimburse the differential rate of GST to the Petitioner.
(b) Direct the respondents by an appropriate writ in the nature of mandamus or any other writ, direction or order, to pay the interest on the tax dues calculated at the rate of 18% per annum under Section 50 of CGST Act, 2017.
(c) Grant such other consequential reliefs, as this Honourable High Court may think fit, including the cost of this writ petition.”
| (i) | Petitions are hereby disposed of. |
| (ii) | The Respondents-State and other Govt agencies / Respondents who have entered into works contract with the Petitioners are issued the following directions / guidelines:- |
| (a) | Calculate the works executed pre-GST (prior to 01.07.2017) under KVAT regime and payments received by the Petitioners. |
| (b) | The payments received by the Petitioners preGST for such of the works executed before 01.07.2017 are to be assessed under KVAT tax regime – either under COT or VAT scheme as applicable. |
| (c) | Calculate the balance works to be completed or completed after 01.07.2017, in the original contract. |
| (d) | Derive the rate of materials, KVAT items required or used to complete the balance works. |
| (e) | Deduct the “KVAT” amount from those materials and the service tax, if applicable. |
| (f) | Add the applicable “GST” on those items. |
| (g) | Input Credit on the materials is to be arrived at and be set off as against the output GST, for those assessed under regular VAT. |
| (h) | Further, the “tax difference” should be calculated on such balance works executed or to be executed after 01.07.2017 separately. |
| (i) | Based on the result obtained on calculation of the tax difference on the contract value, concerned department/authority has to decide whether agreement needs to be changed or not. |
| (j) | A supplementary agreement may be signed with the Petitioners for the revised GST-inclusive work value for the Balance Work completed or to be completed as determined above and in case the revised GST-inclusive work value for the Balance Work, completed or to be completed after 01.07.2017, is more than the original agreement work value, the Petitioners are to be paid /reimbursed, as the case may be, the differential tax amount by the concerned employer; so also, in case payments for works completed pre-GST are made postGST, the concerned employer has to pay or reimburse, as the case may be, the differential tax amount, to the Petitioners. |
| (iii) | Petitioners are directed to submit comprehensive representations to the respective employers/Respondents within a period of 4 weeks from the date of receipt of a copy of this order, irrespective of whether they have completed the works pre-GST or postGST or payments were received or yet to be received post-GST. |
| (iv) | If such representations are submitted, the respective employers/Respondents are directed to consider and dispose of the same in the light of the aforesaid directions / guidelines as expeditiously as possible and at any rate within a period of 8 weeks from the date of submission of the representations. |
| (v) | In view of the interim orders passed by this Court in the present petitions, such of the petitioners who had not filed their GST returns during the period after 01.07.2017 are permitted to file their returns / amended returns, pursuant to the calculation of the differential tax as per procedure above under GST regime, without insisting on interest or penalty or limitation. |
| (vi) | The GST authorities are also directed not to take precipitative action against the Petitioners for a period of 6 months from the date of receipt of a copy of this order. |
| (vii) | Liberty is reserved in favour of the petitioners to challenge any order / decision passed / taken by the respondents or the authorities, subsequent to this order and also take recourse to such remedies as available in law.” |
| (i) | Writ petition is allowed. |
| (ii) | The respondent is hereby directed to reimburse GST amount as indicated in the representation dated 15.04.2023 vide Annexure-E. |
| (iii) | The respondent/Department shall reimburse the said amount within a period of six weeks from the date of receipt of copy of this order. In the light of the issue standing answered, the petition deserves to succeed and the prayer that is sought for is to be allowed. |
| (i) | The petition is allowed. |
| (ii) | The respondents are hereby directed to reimburse GST amount as indicated in the representations dated 02.08.2022, 16.06.2023, 17.06.2023, 20.09.2023 and 30.09.2023. |
| (iii) | The respondents/Department shall reimburse the said amount within a period of six weeks from the date of receipt of a copy of this order.” 4. In view of the aforesaid facts and circumstances, the present petition also deserves to be allowed. |
| (i) | Petition is hereby allowed. |
| (ii) | The respondents are directed to reimburse the GST amounts as indicated in the petitioner’s representations / letters at Annexures-M, M1 and M2 dated 18.08.2021, 13.09.2021 and 30.01.2023 respectively together with applicable interest within a period of four weeks from the date of receipt of a copy of this order.” |
| i. | Petitioners are given liberty to make a detailed representation to respondent Nos.2 to 10 enclosing all the necessary particulars. |
| ii. | Upon receipt of such representation, respondent Nos.2 to 10 are directed to consider the same and refund the amount due to the petitioners within a period of eight weeks thereafter. |
| iii. | The writ petition is disposed of.” |
| (i) | Writ petition is disposed of. |
| (ii) | The Respondents-State and other Govt agencies / Respondents who have entered into works contract with the petitioner are issued the following directions/guidelines:- |
| (a) | Calculate the works executed pre-GST (prior to 01.07.2017) under KVAT regime and payments received by the petitioner. |
| (b) | The payments received by the petitioner pre-GST for such of the works executed before 01.07.2017 are to be assessed under KVAT tax regime either under COT or VAT scheme as applicable. |
| (c) | Calculate the balance works to be completed or completed after 01.07.2017, in the original contract. |
| (d) | Derive the rate of materials, KVAT items required or used to complete the balance works. |
| (e) | Deduct the “KVAT” amount from those materials and the service tax, if applicable. |
| (f) | Add the applicable “GST” on those items. |
| (g) | Input Credit on the materials is to be arrived at and be set off as against the output GST, for those assessed under regular VAT. |
| (h) | Further, the “tax difference” should be calculated on such balance works executed or to be executed after 01.07.2017 separately. |
| (i) | Based on the result obtained on calculation of the tax difference on the contract value, concerned department/authority has to decide whether agreement needs to be changed or not. |
| (j) | A supplementary agreement may be signed with the petitioner for the revised GST-inclusive work value for the Balance Work completed or to be completed as determined above and in case the revised GST-inclusive work value for the Balance Work, completed or to be completed after 01.07.2017, is more than the original agreement work value, the Petitioners are to be paid /reimbursed, as the case may be, the differential tax amount by the concerned employer; so also, in case payments for works completed pre-GST are made post-GST, the concerned employer has to pay or reimburse, as the case may be, the differential tax amount, to the Petitioners. |
| (iii) | Petitioner is directed to submit comprehensive representations to the respective employers/Respondents within a period of 4 weeks from the date of receipt of a copy of this order, irrespective of whether they have completed the works pre-GST or post-GST or payments were received or yet to be received post-GST. |
| (iv) | If such representations are submitted, the respective employers/Respondents are directed to consider and dispose of the same in the light of the aforesaid directions / guidelines as expeditiously as possible and at any rate within a period of 8 weeks from the date of submission of the representations. |
| (v) | In view of the interim orders passed by this Court in the present petition, the petitioner if he had not filed his GST returns during the period after 01.07.2017 is permitted to file his returns / amended returns, pursuant to the calculation of the differential tax as per procedure above under GST regime, without insisting on interest or penalty or limitation. |
| (vi) | The GST authorities are also directed not to take precipitative action against the petitioner for a period of 6 months from the date of receipt of a copy of this order. |
| (vii) | Liberty is reserved in favour of the petitioner to challenge any order / decision passed / taken by the respondents or the authorities, subsequent to this order and also take recourse to such remedies as available in law. |