H.L. Infrastructure vs. State Of Odisha

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount arising from the transition to GST for works contracts. The Court noted that the State Government had issued revised guidelines on December 10, 2018, which superseded the earlier guidelines. These revised guidelines provided a detailed procedure for calculating the GST-inclusive work value for the balance work executed after July 1, 2017. The procedure involved ascertaining the work done after June 30, 2017, determining its revised estimated work value as per the Revised Schedule of Rates – 2014 (SoR-2014), applying the tender premium/discount, and then adding the applicable GST rate. Crucially, the guidelines stipulated that if the revised GST-inclusive work value for the balance work was more than the original agreement work value, the works contractor would be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, which the authority would consider and dispose of in light of the revised guidelines dated December 10, 2018, preferably by March 31, 2019. No coercive action was to be taken against the petitioner until March 31, 2019. The writ petition was disposed of with liberty to challenge the authority's decision if the petitioner remained aggrieved.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties in 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 works contracts entered into before the GST regime, which was not initially envisaged. The State government, through the Finance Department, had previously issued guidelines on December 7, 2017. However, the learned Additional Government Advocate submitted revised guidelines issued on December 10, 2018, in supersession of the earlier ones, addressing the issue of works contracts under GST.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the differential tax amount due to the change in tax regime from VAT to GST for works contracts entered into prior to July 1, 2017, but executed partly or wholly thereafter? The petitioner argued that the introduction of GST led to an unforeseen tax liability on works contracts that were agreed upon under the previous tax regime. They contended that the original agreement rates did not account for GST, and therefore, they should be compensated for this additional tax burden. The revenue, represented by the Additional Government Advocate, submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018. These guidelines provided a procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, and stipulated that the works contractor would be reimbursed if the revised value exceeded the original agreement value, or their payment would be reduced if it was less. The revenue implicitly argued that these revised guidelines provided the mechanism for resolving the petitioner's grievance.