Sri Alok Kumar Bisoyi vs. State Of Odisha

Held

The Court acknowledged the issue faced by contractors due to the transition to GST for works contracts tendered before 01.07.2017 but executed thereafter. The Revenue brought to the Court's notice the revised guidelines issued by the Finance Department of the Government of Odisha on 10.12.2018. These guidelines established a procedure for determining the GST-inclusive work value for the balance work, considering the revised Schedule of Rates (SoR-2014) and any tender premium or discount. The 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 before the appropriate authority within four weeks, ventilating their grievance. The authority was instructed to consider and dispose of this representation in light of the aforesaid revised guidelines dated 10.12.2018, as expeditiously as possible, preferably by 31.03.2019. The Court also granted a stay on coercive action against the petitioner until 31.03.2019.

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) on 01.07.2017. The petitioner's grievance was that the introduction of GST required them to pay taxes not originally envisaged in their agreements, which were entered into prior to the GST regime. The State submitted revised guidelines issued by the Finance Department of the Government of Odisha on 10.12.2018, superseding earlier guidelines from 07.12.2017. These revised guidelines addressed the claims of contractors for additional amounts towards GST on works tendered before 01.07.2017 but executed partly or wholly after that date.

Key Issues

1. Whether the petitioner is entitled to reimbursement of differential tax amounts arising from the change in tax regime from VAT to GST for works contracts entered into before 01.07.2017 but executed thereafter? (Question of law and fact) Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden not accounted for in their original agreements, necessitating reimbursement of the differential tax amount. They relied on the principle that unforeseen tax liabilities arising from a change in law should be addressed to ensure fair contractual terms. Revenue's contention: The Revenue submitted revised guidelines issued by the Finance Department of the Government of Odisha on 10.12.2018, which provided a procedure for determining and reimbursing the GST-inclusive work value for balance work executed after 01.07.2017. This indicated the State's recognition of the issue and a mechanism for its resolution.