Rajiv Kumar Biswal vs. State Of Orissa

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, which superseded the earlier ones and provided a mechanism for addressing the grievances of contractors concerning works contracts executed before and after the GST implementation. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievances. The authority was then directed 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. The Court did not explicitly decide on the validity of the earlier memorandums but effectively rendered them less relevant by directing consideration under the revised guidelines.

Facts

The petitioner challenged 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 also challenged Clause 6 of a Finance Department Memorandum dated July 22, 2017, and Clause 1(iii) of a Memorandum dated December 7, 2017. The core grievance was that the introduction of GST imposed taxes not originally envisaged when agreements were entered into for works contracts. The State submitted revised guidelines issued by the Government of Odisha, Finance Department, via Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated December 10, 2018, superseding previous guidelines.

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 partly or wholly after that date? 2. Whether Clause 6 of the Finance Department Memorandum dated July 22, 2017, and Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, are valid and applicable in light of the subsequent revised guidelines? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not contemplated at the time of entering into the works contract agreements, thus entitling them to reimbursement of the differential tax amount. The petitioner relied on the principle that contractual obligations should not be adversely affected by subsequent legislative changes without adequate provision for compensation. Revenue's contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which addressed the concerns of contractors regarding works contracts under GST. These revised guidelines provided a procedure for determining and reimbursing the differential tax amount for balance work executed after the GST implementation.