Chandan Jaiswal vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, in supersession of the earlier guidelines dated December 7, 2017. These revised guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work executed after the implementation of GST, for contracts tendered before July 1, 2017. 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 rate. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value, the 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, who would consider and dispose of it in light of the revised guidelines dated December 10, 2018, preferably by March 31, 2019. The Court also granted a stay on coercive action against the petitioner until March 31, 2019. The issue of challenging the authority's decision was left open for the petitioner.

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 subsequent Memorandum dated December 7, 2017. The grievance was that the introduction of GST imposed a tax liability not originally envisaged in the agreements. The State submitted revised guidelines dated December 10, 2018, superseding the earlier ones, which provided a procedure for determining the GST-inclusive work value for balance work executed after GST implementation.

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 after that date? 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 light of the subsequent revised guidelines? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not contemplated at the time of entering into the works contracts, and therefore, they should be reimbursed for this differential tax amount. They also challenged the validity of the earlier government memorandums that did not adequately address this issue. Revenue/State's contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which superseded the earlier memorandums and provided a mechanism for addressing the claims of contractors regarding GST on balance work. They relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated December 10, 2018.