Pmc Empires PVT. LTD. vs. State Of Orissa

Held

The Court noted that the State Government had issued revised guidelines on 10.12.2018, superseding the earlier guidelines dated 07.12.2017, to address the representations from contractors claiming additional amounts towards GST for works tendered before 01.07.2017 but executed thereafter. The revised guidelines provide a detailed procedure for determining the GST-inclusive work value for the balance work, including ascertaining the work done after 30.06.2017, determining its revised estimated work value as per the Revised SoR-2014, applying tender premium/discount, adding applicable GST, and signing a supplementary agreement. If the revised GST-inclusive work value is more than the original agreement value for the balance work, the contractor is to be reimbursed. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, which the authority must consider and dispose of in light of the revised guidelines dated 10.12.2018, preferably by 31.03.2019. 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 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) on 01.07.2017. The petitioner also challenged Clause 6 of a Finance Department Memorandum dated 22.07.2017 and Clause 1(iii) of a Memorandum dated 07.12.2017. The grievance was that GST was payable on works contracts entered into before the GST regime, which was not envisaged in the original agreements. The State submitted that revised guidelines were issued on 10.12.2018, superseding the earlier ones, to address difficulties faced by contractors.

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 01.07.2017? 2. Whether Clause 6 of the Finance Department Memorandum dated 22.07.2017 and Clause 1(iii) of the Finance Department Memorandum dated 07.12.2017 are valid and applicable in light of the subsequent revised guidelines? Petitioner's contention: The petitioner argued that they are required to pay GST on works contracts entered into before the GST regime, which was not contemplated in the original agreements, and therefore, they are entitled to reimbursement of this additional tax burden. Revenue's contention: The learned Additional Government Advocate submitted that the Government has issued revised guidelines on 10.12.2018 in supersession of the earlier guidelines, which address the issue of works contracts under GST and provide a procedure for determining the amount payable to contractors.