M/S.Swain And Co. vs. State Of Odisha

Held

The Court did not directly rule on the entitlement to reimbursement but disposed of the petition by directing the petitioner to make a comprehensive representation before the appropriate authority. This representation should be considered and decided in light of the revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha. The authority is expected to dispose of the representation expeditiously, preferably by March 31, 2019. The Court stated that if the petitioner is aggrieved by the authority's decision, they are free to challenge it. No coercive action was to be taken against the petitioner until March 31, 2019. The Court did not expressly leave any issue undecided, but the core issue of entitlement was deferred to the administrative authority's decision based on the new guidelines.

Facts

The petitioner, a 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 sought to quash Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017. The grievance was that the introduction of GST led to tax obligations not anticipated when agreements were entered into. The State's counsel submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, superseding the earlier memorandum.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the differential tax amount due to the change in tax regime from VAT to GST for works contracts executed partly or wholly after July 1, 2017, when tenders were invited prior to this date based on pre-GST rates. Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not factored into the original contract prices, leading to a financial disadvantage. They sought reimbursement for this additional tax liability. Revenue's contention: The Revenue submitted revised guidelines issued by the Finance Department on December 10, 2018, which provided a mechanism for determining and reimbursing the differential GST amount for works contracts executed under the new regime but tendered under the old one. The Revenue relied on these revised guidelines to address the petitioner's grievance.