M/S.Asthalakshmi Construction 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 contractors due to the change in tax regime. These guidelines provide a detailed procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, where tenders were invited before July 1, 2017. The procedure involves ascertaining the work done after June 30, 2017, determining its revised estimated work value as per the revised Schedule of Rates (SoR-2014), adjusting for tender premium/discount, and then adding the applicable GST rate. The guidelines stipulate that if the revised GST-inclusive work value is more than the original agreement work 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, which would consider and dispose of it in light of the revised guidelines dated December 10, 2018. The authority was directed to decide the matter expeditiously, preferably by March 31, 2019. 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 (State authorities) 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, which addressed the issue of works contracts under GST.

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 after that date? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden not envisaged at the time of entering into the agreements, and therefore, they should be reimbursed for this differential tax amount. Revenue's contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, to address such issues concerning works contracts under GST. These guidelines provided a procedure for determining the payable amount to works contractors in such scenarios.