SRI B.H. GANGADHARACHARY & ORS. v. THE UNION OF INDIA & ORS.

Introduction

The petitioners were Grade-I contractors who had entered into various works contracts with departments and agencies of the Government of Karnataka. These contracts were awarded prior to 01.07.2017, when the Karnataka Value Added Tax (KVAT) regime was applicable. Although the contracts were awarded before the implementation of GST, execution of several contracts continued after 01.07.2017, when the GST regime came into force.

The petitioners had quoted their contract prices based on the tax structure prevailing under the KVAT Act and contended that the quoted rates did not include any GST component. After the introduction of GST, they became liable to pay GST on the supplies executed after 01.07.2017, despite having already discharged their KVAT liability for the pre-GST period. According to the petitioners, this resulted in an unforeseen additional tax burden, as they were unable to recover GST from the Government departments under the existing contracts.