M/S.P.C.Construction vs. State Of Orissa

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, in supersession of the earlier ones dated December 7, 2017. These revised guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work executed after the GST implementation, where tenders were invited prior to July 1, 2017. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that balance work, the works 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 directed to consider and dispose of the 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 was aggrieved by the authority's decision, they could challenge it. No coercive action was to be taken against the petitioner until March 31, 2019.

Facts

The petitioner, a works contractor, challenged the State's action 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 specific clauses of Finance Department Memoranda dated July 22, 2017, and December 7, 2017, which governed the treatment of works contracts under the new tax regime. The core grievance was that the GST liability was not anticipated when agreements were entered into based on the previous tax structure. The State submitted revised guidelines issued on December 10, 2018, superseding the earlier ones, to address these issues.

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 thereafter? 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 to the petitioner's claim? Petitioner's Contention: The petitioner argued that the introduction of GST imposed a tax liability that was not envisaged at the time of entering into agreements, leading to a financial burden. They sought reimbursement of this differential tax amount. Revenue's Contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which superseded the earlier ones and provided a mechanism for addressing such claims. The State relied on these revised guidelines.