M/S.Swain And Co. vs. Commnr. Cum Secy

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, superseding the earlier memorandum dated December 7, 2017. These revised guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, for contracts tendered before July 1, 2017. The guidelines stipulated that if the revised GST-inclusive work value for the balance work was more than the original agreement work value for that balance work, the works contractor was to 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 no coercive action would be taken against the petitioner until March 31, 2019. The issue of quashing Clause 1(iii) of the earlier memorandum was implicitly addressed by the issuance of superseding revised guidelines.

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) effective July 1, 2017. The petitioner also sought to quash Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017. The grievance was that the GST liability was not anticipated when the agreement was entered into. The State submitted revised guidelines issued by the Government of Odisha, Finance Department on December 10, 2018, superseding the earlier memorandum, to address issues related to works contracts under GST for tenders invited 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 1(iii) of the Finance Department Memorandum dated December 7, 2017, is liable to be quashed? Petitioner's Contention: The petitioner argued that they are required to pay GST, a tax not envisaged at the time of entering into the agreement, and sought reimbursement for this additional tax burden. The petitioner challenged the initial guidelines that did not adequately address this situation. Revenue's Contention: The learned Additional Government Advocate submitted that revised guidelines were issued on December 10, 2018, which superseded the earlier memorandum and provided a mechanism for determining and reimbursing the differential tax amount for works contracts executed post-GST implementation but tendered prior to it. The State relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated December 10, 2018.