Arun Kumar Meher vs. State Of Odisha

Held

The Court acknowledged the issue faced by contractors due to the GST implementation on works contracts tendered before 01.07.2017 but executed thereafter. The Court noted the revised guidelines issued by the Government of Odisha, Finance Department, on 10.12.2018, which provided a framework for calculating the GST-inclusive work value for the balance work. These guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value, 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, which the authority was to consider and dispose of in light of the revised guidelines dated 10.12.2018, preferably by 31.03.2019. The Court also granted liberty to the petitioner to challenge the authority's decision if aggrieved and restrained coercive action until 31.03.2019.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State authorities) in 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 dated 07.12.2017, to address the issue of works contracts executed partly or wholly after 01.07.2017, for tenders invited prior to 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 01.07.2017 but executed thereafter? (Question of law) Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden not contemplated in the original agreements, and they should be reimbursed for this differential tax amount. They relied on the principle that tax liabilities should not be imposed retrospectively or in a manner that was not agreed upon at the time of contract execution. Revenue's contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on 10.12.2018 to address such situations. These guidelines provided a procedure for determining the GST-inclusive work value for the balance work and stipulated reimbursement or recovery based on the comparison with the original agreement value.