H.L. Infrastructure vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, to address the difficulties faced by works contractors due to the transition to GST. These guidelines provide a detailed procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, for contracts tendered before that date. The procedure involves ascertaining the work done after June 30, 2017, determining its revised estimated work value as per the Revised SoR-2014, adjusting for tender premium/discount, and then adding the applicable GST. If the revised GST-inclusive work value is higher than the original agreement value for the balance work, the contractor is to be reimbursed for the excess amount. 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 expeditiously, preferably by March 31, 2019. No coercive action was to be taken against the petitioner until March 31, 2019. The Court expressly left it open for the petitioner to challenge the decision of the authority if aggrieved.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (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 they were required to pay GST on works contracts entered into before the GST regime, which was not anticipated in the original agreements. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, on tenders invited before that date based on the Schedule of Rates – 2014 (SoR-2014).

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 partly or wholly thereafter? 2. Whether the revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha, provide an adequate mechanism for addressing the petitioner's grievance regarding the differential tax amount? Petitioner's Contention: The petitioner argued that the introduction of GST led to an additional tax burden not envisaged at the time of entering into the agreements, and they are facing difficulties in this regard. They sought reimbursement of this differential tax amount. Revenue's Contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which superseded the previous guidelines and provided a framework for dealing with such claims. The State relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated 10.12.2018.