H.L. Infrastructure vs. State Of Odisha

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount due to the GST implementation. The Revenue presented revised guidelines dated 10.12.2018, which established a clear procedure for calculating and reimbursing the GST-inclusive work value for the balance portion of works contracts executed after 01.07.2017, where the tender was invited prior to that date based on the SoR-2014. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement value for that balance work, the contractor would be reimbursed for the excess amount. Conversely, if it was less, the payment would be reduced, and any excess payment already made would be recovered. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, ventilating their grievance. The authority was instructed to consider and dispose of this representation in light of the revised guidelines dated 10.12.2018, preferably by 31.03.2019. The Court also granted a stay on coercive action against the petitioner until 31.03.2019.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State authorities) for not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) on 01.07.2017. The petitioner's grievance was that they were required to pay GST on works contracts entered into before the GST regime, which was not envisaged in the original agreements. The State submitted revised guidelines issued by the Finance Department on 10.12.2018, superseding earlier guidelines from 07.12.2017, to address such issues related to works contracts executed partly or wholly after 01.07.2017.

Key Issues

1. Whether the petitioner is entitled to reimbursement of differential tax amounts arising from the change in tax regime from VAT to GST for works contracts entered into prior to 01.07.2017 but executed thereafter? (Question of law) Petitioner's contention: The petitioner argued that the introduction of GST led to an additional tax burden not accounted for in the original agreements, necessitating reimbursement of the differential tax amount. Revenue's contention: The Revenue submitted revised guidelines dated 10.12.2018 issued by the Finance Department, Government of Odisha, which provided a procedure for determining and reimbursing the GST-inclusive work value for the balance work executed after 01.07.2017, in cases where tenders were invited before that date on the basis of the Schedule of Rates – 2014 (SoR-2014).