M/S.Biraja Construction vs. Odisha State Rural Road Agency Cum Rural Development Dept.

Held

The Court acknowledged the petitioner's grievance regarding the additional tax burden due to the GST regime change. The revenue/State presented revised guidelines dated December 10, 2018, which provide a mechanism for addressing claims for differential tax amounts on works contracts. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, detailing their grievance. The authority is mandated to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by March 31, 2019. The Court also stated that if the petitioner is aggrieved by the authority's decision, they are free to challenge it. No coercive action will be taken against the petitioner until March 31, 2019. The writ petition was disposed of with these directions.

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 July 1, 2017. The petitioner's grievance was that GST was payable on works contracts entered into before the GST regime, which was not originally envisaged. The revenue/State submitted revised guidelines issued by the Government of Odisha, Finance Department on December 10, 2018, superseding earlier guidelines dated December 7, 2017. These revised guidelines addressed the issue of additional amounts claimed by contractors for GST on works tendered before July 1, 2017, but executed partly or wholly thereafter.

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? (Question of law) Petitioner's Contention: The petitioner argued that they are required to pay GST on contracts where the agreement was made before the GST regime, an expense not initially factored into the contract price. They sought reimbursement for this additional tax burden. Revenue/State's Contention: The revenue/State submitted revised guidelines dated December 10, 2018, which provide a procedure for determining and reimbursing or recovering the differential GST amount for works contracts executed after the GST implementation but tendered before it. They relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated 10.12.2018.