M/S.Venkata Pandarunga Constructions vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, to address the issue of works contracts entered into before July 1, 2017, but executed thereafter. These guidelines provide a mechanism for determining the GST-inclusive work value for the balance work and allow for reimbursement to the contractor if this revised value is higher than the original agreement value for the balance work. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority is 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 is aggrieved by the decision of the authority, they are free to challenge it. No coercive action is to be taken against the petitioner until March 31, 2019. The issue of reimbursement was not directly decided by the Court but was remitted to the appropriate authority for consideration under the revised guidelines.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State of Odisha) in not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) effective from 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 at the time of agreement. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address such issues for works contracts 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 arising from 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 that was not envisaged when the agreements were finalized, 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, on December 10, 2018. These guidelines provide a procedure for determining the GST-inclusive work value for the balance work executed after the GST implementation and stipulate reimbursement if the revised value exceeds the original agreement value.