M/S.Sarat Kumar Rout vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, superseding the earlier memorandum dated December 7, 2017. These revised guidelines provide a procedure for determining the GST-inclusive work value for the balance work executed after the GST implementation, even if the tender was invited before July 1, 2017. The guidelines stipulate that if the revised GST-inclusive work value for the balance work is more than the original agreement work value for the balance work, the works contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment made is to be recovered. 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, expeditiously, preferably by March 31, 2019. The Court also stated that if the petitioner is aggrieved by the authority's decision, they can challenge it. No coercive action is to be taken against the petitioner until March 31, 2019. The issue of the validity of the specific clause of the earlier memorandum was implicitly addressed by the introduction of the superseding revised guidelines.

Facts

The petitioner filed a writ petition challenging the action of the opposite parties 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 also challenged Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017. The grievance was that the petitioner had to pay GST on works contracts entered into before the GST regime, which was not originally envisaged. 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 the earlier guidelines.

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? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, is valid in light of the subsequent revised guidelines? Petitioner's Contention: The petitioner argued that they are required to pay GST on works contracts that were agreed upon before the GST regime, leading to an unforeseen financial burden. They sought reimbursement for this differential tax amount. Revenue's Contention: The learned Additional Government Advocate submitted that revised guidelines were issued on December 10, 2018, which address the issue of works contracts under GST and supersede the earlier memorandum. The State presented these revised guidelines to the Court.