Differential GST on Pre-GST Works Contracts Reimbursable | HC

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Differential GST reimbursement

Case Details: N.R. Kulkarni NRK Construction Company vs. Union of India - [2025] 181 taxmann.com 611 (Karnataka)

Judiciary and Counsel Details

  • M. Nagaprasanna, J.
  • Shivraj S. Balloli, Adv. for the Petitioner.
  • T. Hanumareddy, AGA, S.M. Kalwad, M.M. Patil, R.M. Kulkarni & Bushan B. Kulkarni, Advs. for the Respondent.

Facts of the Case

The petitioner executed works contracts before the commencement of the GST regime. Payments for such works were received after the implementation of GST. It was submitted that it was entitled to reimbursement of the differential tax amount arising from the change in the applicable tax rate. It was contended that the works executed should be reassessed for accurate tax applicability and for the purpose of claiming the differential tax reimbursement. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that works executed before GST implementation were to be valued under the Karnataka Value Added Tax (KVAT) regime, while payments received post-GST were subject to differential tax calculated based on the original contract and applicable GST on materials, after adjusting for KVAT and service tax. The Court directed that input tax credit on materials be set off against output GST for works assessed under regular VAT. The petitioner was entitled to reimbursement of the differential tax amount by the concerned employer, and the Court directed that the petitioner must submit comprehensive representations to the respective employers/authorities.

List of Cases Reviewed

  • Chandrashekaraiah v. State of Karnataka [2024] 158 taxmann.com 443 (Kar)/Writ Petition No. 9721 of 2019 and connected cases disposed on 11.04.2023 (para 2)
  • Gowri Infraengineers (P.) Ltd. v. Karnataka Slum Development Board [W.P. No. 8489 of 2023 (T-RES), dated 13-8-2024] (para 3)
  • Prasanna N Rajapurohit v. State of Karnataka [W.P. No.13167 of 2024 (T-RES), dated 29-10-2024] (para 3)
  • Mycon Construction Ltd. v. State of Karnataka [2025] 180 taxmann.com 352 (Kar)/W.P. 25439 of 2023 disposed on 16.09.2025 (para 4) followed

List of Cases Referred to

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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