H.L. Infrastructure vs. State Of Odisha

Held

The Court acknowledged the issue of differential tax amounts for works contracts executed across the VAT-to-GST transition. The Revenue presented revised guidelines dated December 10, 2018, which provided a mechanism for calculating the GST-inclusive work value for the balance work executed after July 1, 2017. These guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that balance work, the works contractor would be reimbursed for the excess amount. Conversely, if the revised value 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, ventilating their grievance. The authority was instructed 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 remained aggrieved by the authority's decision, they would be at liberty to challenge it. 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 for 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 submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines addressed the issue of additional GST claims by contractors for 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 due to 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 not contemplated at the time of entering into the agreements, and therefore, they should be reimbursed for this differential tax amount. Revenue's contention: The Revenue submitted revised guidelines issued by the Government of Odisha, Finance Department, dated December 10, 2018. These guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated reimbursement if the revised value exceeded the original agreement value, or recovery if it was less. The Revenue relied on these revised guidelines to address the petitioner's grievance.