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

Held

The Court noted that the State had issued revised guidelines on 10.12.2018, superseding the earlier memorandum dated 07.12.2017. These revised guidelines provide a procedure for determining the GST-inclusive work value for the balance work in cases where tenders were invited before 01.07.2017 but payments were made after the GST implementation. The guidelines outline steps to ascertain the balance work, determine its revised estimated value as per the Revised SoR-2014, adjust for tender premium/discount, and add the applicable GST rate. Crucially, the guidelines state 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, who would consider and dispose of it in light of the revised guidelines dated 10.12.2018. No coercive action was to be taken against the petitioner until 31.03.2019.

Facts

The petitioner, a works contractor, filed a writ petition challenging the opposite parties' action of 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 also challenged Clause 1(iii) of the Finance Department Memorandum dated 07.12.2017. The grievance was that the introduction of GST meant the petitioner had to pay taxes not originally envisaged in the agreement. The State submitted revised guidelines issued by the Government of Odisha, Finance Department, on 10.12.2018, superseding the earlier memorandum.

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 tendered before 01.07.2017 but executed partly or wholly after that date? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated 07.12.2017 is valid and applicable in determining the reimbursement of differential tax amounts? Petitioner's contention: The petitioner argued that due to the introduction of GST, they are required to pay taxes that were not contemplated when entering into the agreements, leading to financial hardship. They sought reimbursement of this differential tax amount. Revenue's contention: The learned Additional Government Advocate submitted that revised guidelines were issued on 10.12.2018, which address the concerns raised by contractors regarding works contracts under GST. These revised guidelines supersede the earlier memorandum dated 07.12.2017.