Incremental GST burden on pre-GST works contracts is recoverable only from the contracting employer and not from the State or tax authorities

Last updated: 10 August 2026

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The Karnataka High Court has ruled that contractors seeking reimbursement for extra GST paid on works contracts entered into before the GST regime can only claim this from their direct employer. The court clarified that the State Government and tax authorities are not liable for this additional burden. Furthermore, the court stated that statutory timelines for filing returns, paying interest, and penalties under GST law cannot be altered or waived by contractual agreements or court orders.

Court :
Karnataka High Court

Brief :
The Hon'ble Karnataka High Court in State of Karnataka & Ors. v. Unique Constructions & Ors. [Writ Appeal No. 615 of 2025 (GM-RES) dated June 10, 2026] partly allowed the appeal filed by the State of Karnataka and held that reimbursement of incremental GST paid by contractors pursuant to transition from the KVAT regime to the GST regime can be claimed only against the concerned employer under the works contract and not against the State Government or the tax authorities. It was further held that the liability to pay GST is a matter of statutory prescription which cannot be altered by contractual arrangements and therefore, no directions could be issued permitting filing of revised returns beyond statutory timelines or waiving interest, penalty and limitation prescribed under the GST law.

Citation :
Writ Appeal No. 615 of 2025 (GM-RES) dated June 10, 2026

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1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

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Attached File : 671907_6079_07_unique_constructions.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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