Smruti Ranjan Swain vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, superseding the earlier ones challenged by the petitioner. These revised guidelines provide a procedure for determining the GST-inclusive work value for the balance work executed after GST implementation, even if the tender was invited before July 1, 2017. The guidelines stipulate that if the revised GST-inclusive work value for the balance work exceeds the original agreement work value for that balance work, the works contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment already made is to be recovered. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority is to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, expeditiously, preferably by March 31, 2019. No coercive action was to be taken against the petitioner until March 31, 2019. The Court explicitly stated that if the petitioner is aggrieved by the authority's decision, they are free to challenge it.

Facts

The petitioner 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 Finance Department Memorandum dated December 7, 2017. The core grievance is that the introduction of GST imposed taxes not anticipated when agreements were entered into. The State submitted revised guidelines issued by the Government of Odisha, Finance Department, via Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated December 10, 2018, superseding previous guidelines.

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 entered into before 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 in light of the GST regime? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not factored into the original agreements, leading to a financial disadvantage. They sought reimbursement of this differential tax amount. Revenue's contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which addressed the concerns of contractors regarding works contracts under GST. These revised guidelines were presented to the Court.