Hari Mungamuru Vs Deputy Commissioner
Date: December 1, 2025
Subject Matter
Supplier Entitled to Recover Differential GST from Recipients
Summary
The High Court has disposed of the writ petition by following its earlier precedent set in W.P.No.22663 of 2023. While the Court affirmed the assessment order (confirming the tax liability), it issued a critical mandatory direction to the 4th respondent (the service recipient/government entity) to pay the differential tax amount to the petitioner. This enables the petitioner to discharge their statutory tax obligation to the Commercial Tax Department.
Summary of Facts and Dispute:
The Precedent: The Court noted that the legal issue regarding who bears the burden of differential tax rates in contractual service agreements was already settled by its order dated 24.07.2024.
Affirmation of Tax: The assessment order issued by the Tax Department is upheld; the tax is indeed due and payable.
The Burden of Tax: The core of the dispute involved the petitioner (Service Provider) seeking the differential tax amount from the 4th Respondent (Service Recipient) because the assessment resulted in a tax demand higher than what was originally billed or paid.
Dispute over Quantum: The 4th Respondent argued that there is a disagreement regarding the actual figures of tax already paid and the exact differential balance currently due.
Key Directions of the Court:
The Court provided a structured timeline to resolve the financial reconciliation and ensure the tax is paid:
Payment of Differential Tax: The 4th respondent is directed to pay the differential tax amount for the relevant assessment periods to the petitioner. This payment must be cleared within two months.
Admitted vs. Disputed Amounts: The 4th respondent must pay the admitted amount of differential tax within the two-month window regardless of any ongoing reconciliation disputes.
Reconciliation Process:
Within one week of the order, the 4th respondent must provide the petitioner with a detailed breakdown of taxes already paid and the calculated balance.
The petitioner is permitted to reconcile these figures.
If a dispute over the calculation persists after reconciliation, the petitioner is granted the liberty to pursue separate legal remedies for finalization of the disputed amount.
Legal Context: "Passing on" the Tax
The ruling underscores a fundamental principle of GST as an indirect tax: while the legal liability to pay the tax to the government lies with the supplier (Petitioner), the economic burden is intended to be borne by the recipient (4th Respondent). When tax authorities demand a differential (higher) rate of tax post-assessment, the supplier is entitled to recover that difference from the recipient to ensure the supplier is not out of pocket for a statutory levy.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
The issue raised in the present Writ Petition has been decided by this Court, by an Order, dated 24.07.2024, in W.P.No.22663 of 2023.
2. Following the said Judgment, this Writ Petition is disposed of, affirming the order of assessment. However, there shall also be a direction to the 4th respondent to pay the differential amount of taxes for the assessment periods, covered under the impugned assessment order to the petitioner to enable the said petitioner to pass on the said tax to the Commercial Tax Department. The said payment shall be cleared within a period of two (02) months from the date of receipt of this order.
3. Smt. Santhi Chandra, learned Standing Counsel appearing for the 4th respondent would contend that there are some disputes as to the actual amount of tax already paid and whether such payments would cover even the differential amount that would be payable under this Order. In such circumstances, the 4th respondent shall, within a period of one week from the date of receipt of this Order, set out the details of payment of tax made to the petitioner and the balance amount payable, on account of the differential rate of tax. Upon receipt of this communication, it would be open to the petitioner to reconcile the amounts payable. If such disputes persist, it would also be open to the petitioner to avail of his remedies, under the law, for finalization of the amounts payable to the petitioner.
4. Needless to say, the 4th respondent shall pay the admitted amount of differential tax, within two months from the date of receipt of this Order. There shall be no order as to costs.
As a sequel, interlocutory applications pending, if any shall stand closed.