M/S.Pmc Empires PVT.LTD. vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, superseding the earlier ones dated July 22, 2017, and December 7, 2017. These revised guidelines provided a detailed procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, for contracts tendered before that date based on the pre-revised Schedule of Rates (SoR-2014). The procedure involved ascertaining the work done after June 30, 2017, determining its revised estimated work value as per the Revised SoR-2014, adjusting it by the tender premium/discount, and then adding the applicable GST. 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 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 to 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, expeditiously, preferably by March 31, 2019. The petitioner was granted liberty to challenge the authority's decision if aggrieved. No coercive action was to be taken against the petitioner until March 31, 2019.

Facts

The petitioner, a works contractor, filed a writ petition challenging the State's action of 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. The core grievance was that the introduction of GST imposed taxes not anticipated when agreements were entered into. The State submitted revised guidelines issued on December 10, 2018, superseding the earlier ones, which provided a framework for calculating GST-inclusive work values for contracts tendered before July 1, 2017, but executed partly or wholly after that date.

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. 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 determining the tax liability and reimbursement for such works contracts. Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not envisaged at the time of entering into the agreements, necessitating reimbursement of the differential tax amount. The petitioner challenged the validity of the earlier Finance Department Memoranda which did not adequately address this issue. Revenue's Contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which provided a comprehensive procedure for dealing with works contracts executed across the VAT-GST transition period. These revised guidelines superseded the earlier ones and offered a mechanism for determining the GST-inclusive work value and reimbursement.