M/S.P.M.Contractors PVT.LTD vs. The Executive Engineer,Rural Works Division

Held

The Court noted that the issue raised by the petitioner regarding the differential tax amount for works contracts executed post-GST implementation but tendered prior to it had been decided in several previous cases. The Court acknowledged the State's submission that revised guidelines were issued on December 10, 2018, by the Finance Department, Government of Odisha. These guidelines outlined a procedure for calculating the GST-inclusive work value for the balance work, taking into account the revised Schedule of Rates (SoR-2014) and any tender premium or discount. Crucially, the guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that balance work, the works contractor was to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, which the authority was to consider and dispose of in light of the revised guidelines dated December 10, 2018, expeditiously, preferably by February 29, 2020. No coercive action was to be taken against the petitioner until that date. The Court expressly left undecided any potential future challenges if the petitioner remained aggrieved by the authority's decision.

Facts

The petitioner, a contractor, challenged the State's action of not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) effective July 1, 2017. The petitioner's grievance was that they were required to pay GST on contracts entered into before the GST regime, which was not initially envisaged. The State submitted that revised guidelines were issued by the Finance Department of the Government of Odisha on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines addressed the issue of works contracts executed partly or wholly after the GST implementation but tendered before it.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the differential tax amount arising from the change in tax regime from VAT to GST for works contracts entered into before July 1, 2017, but executed thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not contemplated when the agreements were made, and therefore, they should be reimbursed for this differential tax amount. Revenue/State's contention: The learned Additional Government Advocate submitted that the Government of Odisha had issued revised guidelines on December 10, 2018, to address such issues. These guidelines, in supersession of earlier ones, provided a procedure for determining the GST-inclusive work value for the balance work executed after GST implementation and stipulated reimbursement for excess amounts if the revised value exceeded the original agreement value.