Differential GST reimbursement is a dispute between contractors and employers; tax liability remains governed by statute.

The petitioner, a civil contractor, sought declarations concerning the validity of Section 7(3) read with Clause 6 of Schedule II of the GST Act, reimbursement from government employers of additional GST allegedly paid on works contracts, and a State policy addressing the transition from VAT to GST.

He also challenged a GST assessment order under Section 73(9) for FY 2018–19 and a garnishee notice issued in February 2026.

The Court considered the reliefs in light of earlier decisions of the Karnataka High Court, including the Division Bench’s modification of the order in Chandrashekharaiah.

1. Whether the petitioner’s claims concerning the GST burden on works contracts and reimbursement were governed by the prior decisions of the Karnataka High Court.

2. Whether the Court should grant the requested relief against the assessment order and garnishee notice in this petition.

The Court applied the statutory principle that GST liability, assessment, recovery and enforcement are governed by the applicable GST legislation and cannot be altered by the terms of a contract between a contractor and an employer.

The Division Bench in Office of the Principal Commissioner, GST and Central Excise v. R. Chandrashekhar S/o. Ramaiah, W.A. No. 1587/2023 and connected matters, held that disputes over reimbursement of incremental tax are between contractors and their employers; directions concerning tax administration cannot override the statutory scheme, and directions to reimburse differential tax operate only against the concerned employers.

The Court also followed the coordinate-bench order in W.P. No. 100867/2026, which adopted specified directions from Chandrashekharaiah v. State of Karnataka, W.P. No. 9721/2019, including directions for representations to employers and their consideration, while preserving the petitioner’s liberty to challenge assessment orders in appropriate proceedings.

The Court treated the petitioner’s dispute as covered by the prior decisions.

Under the Division Bench ruling, the petitioner’s claim for differential-tax reimbursement could be pursued against the relevant government employers, but it could not support directions altering GST assessment, collection or enforcement by tax authorities.

The Court therefore disposed of the petition in accordance with the Division Bench and coordinate-bench orders, rather than deciding the constitutional challenge or the merits of the impugned assessment and garnishee notice.

The petitioner’s reimbursement claim was thus confined to the employer–contractor relationship, subject to the applicable directions concerning representations; the petition did not result in relief against the tax authorities on the GST liability.

The incorporated order preserved liberty to challenge assessment orders in appropriate proceedings.