State of Karnataka v. Sudhanva Engineers and Builders A Sole Proprietorship
In favour of the revenue
The ruling in brief
In Writ Appeal No. 718 of 2025, decided by the Karnataka High Court on 10 June 2026, the State challenged directions that would require GST authorities to permit revised returns and waive interest, penalty, or limitation for a contractor seeking reimbursement of incremental GST on a government works contract. The contractor had argued contractual entitlement to pass-through of post-GST tax; the appellate bench held that reimbursement of tax paid or payable after 1 July 2017 is strictly a dispute between contractor and employer under their agreement. Statutory liability under section 9 and allied CGST provisions cannot be reshaped by contract, and courts cannot direct tax authorities to waive compliance timelines or limitation. Sections 73 and 108 were discussed in that context. The appeal favoured the revenue by confining contractual reimbursement to the employer relationship. Not legal advice.
For information only — not legal advice. Read the full judgment and applicable law before relying on this summary.
Provisions considered
- CGST S.73 — Determination of tax not paid or short paid (non-fraud cases).
- CGST S.9 — Levy of CGST; includes reverse-charge liability in notified cases.
- CGST S.108 — Section 108 of the Central Goods and Services Tax Act, 2017.
Source documents
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