Prasanta Kumar Pattnaik vs. State Of Orissa

Held

The Court noted that the revenue had issued revised guidelines on December 10, 2018, in supersession of the earlier guidelines. These revised guidelines provided a detailed procedure for calculating the GST-inclusive work value for the balance work executed after June 30, 2017. Crucially, point 3(vii) of these guidelines states 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. The Court directed the petitioner to make a comprehensive representation before the appropriate authority, ventilating their grievance in light of these revised guidelines. The authority was directed to consider and dispose of the representation expeditiously, preferably by March 31, 2019. The Court also stated that no coercive action would be taken against the petitioner until March 31, 2019, and if aggrieved by the authority's decision, the petitioner could challenge it. The issue of the validity of the earlier memorandums was implicitly addressed by the adoption of the revised guidelines.

Facts

The petitioner, a works contractor, 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 6 of a Finance Department Memorandum dated July 22, 2017, and Clause 1(iii) of a Memorandum dated December 7, 2017. The grievance was that the introduction of GST imposed a tax liability not originally contemplated in the agreements. The revenue, through the Additional Government Advocate, submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, superseding the previous 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 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 in light of the subsequent revised guidelines? Petitioner's contention: The petitioner argued that the introduction of GST created an unforeseen tax burden on works contracts that were initiated under the previous tax regime, leading to a financial disadvantage. They sought reimbursement for this differential tax amount. Revenue's contention: The revenue submitted revised guidelines dated December 10, 2018, which provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated reimbursement if the revised value exceeded the original agreement value. They relied on these revised guidelines.