2025 (2) TMI 1010 - HC - GST

Rate of GST on works contracts - Government entity or not - recovery of differential tax - HELD THAT - There is no doubt that the petitioner is liable to pay GST @ 18% on the taxable turnover arising out of the contract with the 1st respondent. However the 1st respondent had only reimbursed @12% instead of 18%. The contention of the petitioner that the contract between the petitioner and the 1st respondent required the 1st respondent to reimburse the entire amount of GST paid by the petitioner has not been contradicted. In such circumstances it must be held that the 1st respondent was liable to reimburse the petitioner to the extent of the GST paid out by the petitioner and accordingly the 1st respondent is liable to reimburse the petitioner the differential amount of GST @ 6% for the period for which the petitioner ended up paying GST @ 18%. Needless to say if interest is recovered from the petitioner for late payment by the GST authorities the same shall be reimbursed by the 1st respondent. This Writ Petition is disposed of directing the 1st respondent to reimburse the petitioner to the extent of the differential amount of GST paid by the petitioner over and above the GST which has been reimbursed by the 1st respondent on account of the works executed by the petitioner under the contract with the 1st respondent.

Summary

The High Court of Andhra Pradesh addressed a dispute regarding the rate of GST payable by a petitioner engaged in works contracts with the 1st respondent. The petitioner believed the 1st respondent, a corporation, was eligible for a concessional rate of 12% GST, but tax authorities demanded payment at 18%. The Authority for Advance Ruling confirmed the 18% rate. The court held that while the petitioner must pay 18% GST, the 1st respondent should reimburse the petitioner for the difference between 12% and 18% paid by the petitioner. The court directed the 1st respondent to reimburse this amount within three months, with no costs awarded.