Balakrushna Mohanty vs. State Of Orissa And Others

Held

The Court noted that the Government of Odisha had issued revised guidelines on December 10, 2018, to address the issue of differential tax amounts for works contracts executed partly or wholly after the implementation of GST, where tenders were invited prior to July 1, 2017. These guidelines provide a mechanism for ascertaining the balance work done after June 30, 2017, determining its revised estimated work value as per the Revised Schedule of Rates (SoR-2014) which excluded taxes, applying any tender premium/discount, and then adding the applicable GST rate. The guidelines stipulate that if the revised GST-inclusive work value for the balance work is more than the original agreement work value, the contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment already made is to be recovered. 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.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (revenue/State) in not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) effective from 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 envisaged in the original agreements. The State government, through the Finance Department, issued revised guidelines on December 10, 2018, superseding earlier guidelines dated December 7, 2017, to address such issues for works contracts tendered before July 1, 2017, but executed partly or wholly after that date.

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 prior to 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 finalized. They sought reimbursement 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 the concerns of contractors regarding works contracts under GST. These guidelines provided a procedure for determining and reimbursing the differential tax amount.