M/S.Gourav Construction vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on 10.12.2018 to address the issue of reimbursement of differential tax amounts for works contracts executed after the implementation of GST. These guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work, including provisions for reimbursement if the revised value was higher than the original agreement value. The Court directed the petitioner to make a comprehensive representation before the appropriate authority, ventilating their grievance. The authority was instructed to consider and dispose of this representation in light of the revised guidelines dated 10.12.2018, as expeditiously as possible, preferably by 31.03.2019. 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 31.03.2019. The issue of the specific amount of reimbursement was not decided by the Court but was to be determined by the authority based on the 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) on 01.07.2017. The petitioner's grievance was that they were required to pay GST on works contracts entered into before the GST regime, which was not initially envisaged. The State submitted revised guidelines issued by the Finance Department on 10.12.2018, superseding earlier guidelines from 07.12.2017, to address such issues. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after 01.07.2017, including reimbursement for excess amounts.

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 01.07.2017 but executed partly or wholly after that date? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden not contemplated at the time of entering into the agreements, and therefore, they should be reimbursed for this differential tax amount. They relied on the principle that tax liabilities should not be imposed retrospectively or in a manner that was not agreed upon. Revenue's contention: The State submitted that revised guidelines were issued on 10.12.2018 to address the grievances of contractors. These guidelines provided a mechanism for calculating the GST-inclusive work value for the balance work and stipulated that the contractor would be reimbursed if the revised value exceeded the original agreement value. The State relied on these revised guidelines as the basis for resolving the issue.