The Karnataka High Court has issued a writ of mandamus directing the State respondents to determine and reimburse the differential GST amount payable to a civil contractor arising from the introduction of GST during the currency of a pre-existing works contract. The ruling by Justice Sachin Shankar Magadum in WP No. 107196 of 2026 (M/s N.S. Nayak and Sons, decided 25.08.2026) follows a consistent line of decisions of the court holding that the recipient of the works contract service — in this case the State and its instrumentalities — is liable to bear the differential tax burden arising from the transition from VAT to GST.
The petitioner, a registered civil contractor, had been entrusted with civil works under the Nagarothana (Municipality) 3rd Phase Project. During the currency of the contract, GST came into force replacing the earlier VAT regime, resulting in additional tax liability for the petitioner. Despite having discharged the differential GST before the competent authority, the State had not reimbursed the amount. The court held that the petitioner had acquired a corresponding legal right to seek reimbursement, and the State, being the beneficiary of the work executed, was under a bounden duty to reimburse. Reimbursement was directed within six weeks, confined to the differential tax liability attributable to the introduction of GST and subject to verification of records.
- 2026-juristway.com-2479-HC(Karnataka)-GST | High Court of Karnataka | WP No. 107196 of 2026 | 25.08.2026