Balakrushna Mohanty vs. State Of Orissa

Held

The Court noted that the State Government had issued revised guidelines on 10.12.2018, superseding earlier ones, to address the issue of differential tax amounts for works contracts executed after the GST implementation but tendered before it. These guidelines outline a procedure to ascertain the balance work quantity and its value as per the original agreement (based on pre-revised SoR-2014), determine the revised estimated work value for the balance work as per the Revised SoR-2014 (excluding embedded taxes), adjust this value by the tender premium/discount, and then add the applicable GST rate to arrive at the GST-inclusive work value. The guidelines stipulate that if this revised GST-inclusive work value is more than the original agreement value for the balance work, the contractor is to be reimbursed for the excess amount. Conversely, if it's 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 10.12.2018, preferably by 31.03.2019. No coercive action was to be taken against the petitioner until 31.03.2019. The issue of whether the petitioner is entitled to reimbursement is to be decided by the authority based on these guidelines.

Facts

The petitioner, a works contractor, filed a writ petition challenging the opposite parties' failure to reimburse 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 originally envisaged. The State government, through the Finance Department, issued revised guidelines on 10.12.2018, superseding earlier guidelines dated 07.12.2017, to address the difficulties faced by contractors regarding works contracts under GST. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after 01.07.2017, including provisions for reimbursement or recovery of excess payments.

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 executed partly or wholly after 01.07.2017, where tenders were invited prior to this date. Petitioner's contention: The petitioner argued that the introduction of GST led to an additional tax burden not contemplated at the time of entering into the agreements, and therefore, they should be reimbursed for this differential tax amount. Revenue/State's contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on 10.12.2018 to address such issues concerning works contracts under GST. These guidelines provided a mechanism for calculating the GST-inclusive work value and determining the payable amount to the works contractor.