Differential GST on Pre-GST Works Contracts Reimbursable | HC

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

• Chandrashekaraiah v. State of Karnataka [2024] 158 taxmann.com 443 (Kar) (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) (para 4).