Contractor Must Refund GST Differential Despite Rate Cut | J&K HC

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  • Last Updated on 19 June, 2025

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GST differential refund by contractor

Case Details: Kapil Kumar Khattar vs. Union of India - [2025] 173 taxmann.com 629 (Jammu & Kashmir and Ladakh)

Judiciary and Counsel Details

  • Sanjeev Kumar & Puneet Gupta, JJ.
  • Ajay Kumar Vali & Raghav Gaind, Advs. for the Petitioner.
  • Vishal Sharma, DSGI for the Respondent.

Facts of the Case

The petitioner, a government contractor, filed a review petition challenging the direction issued by the jurisdictional authority to deposit the differential amount of tax, following a reduction in the GST rate applicable to works contracts. The contractor had initially submitted a bid when the GST rate was 18 per cent. Subsequently, the GST Council recommended a reduction of GST on works contracts to 12 per cent, pursuant to which Notification No. 24/2017-Central Tax (Rate), dated 21-09-2017 was issued, amending the earlier Notification No. 20/2017-Central Tax (Rate), dated 22-08-2017. The petitioner argued that the contract was awarded after 21-09-2017 and thus ought to be governed by the reduced rate of 12 per cent.

It was further submitted that this fact had not been duly considered in the High Court’s earlier order, and therefore a review was sought. The matter was accordingly placed before the High Court.

High Court Held

The Jammu & Kashmir and Ladakh High Court held that the petitioner was bound by the terms of the contract, which explicitly stipulated that any reduction in the rate of tax post-agreement would result in a corresponding refund of the differential amount by the contractor to the government. The Court observed that the relevant contractual provision was never challenged and clearly established reciprocal obligations—namely, reimbursement in case of increase and refund in case of reduction. It was thus immaterial whether the work order was issued before or after the rate reduction under Notification No. 24/2017-Central Tax (Rate), dated 21-09-2017.

The Court concluded that the contractor was liable to pay the differential tax amount in accordance with the contract and applicable provisions under section 9 of CGST Act and the Jammu & Kashmir GST Act.

List of Cases Reviewed

List of Cases Referred to

  • Pradeep Electricals and Builders (P.) Ltd. v. Union of India [WP (C) No. 170 of 2021, dated 3-11-2023] (para 4).

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied