Prafulla Ku.Mohanty vs. State Of Odisha

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 in cases where tenders were invited before July 1, 2017, but payments were made after GST implementation. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value, the works contractor would 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 this 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 if the petitioner was aggrieved by the authority's decision, they could challenge it. No coercive action was to be taken against the petitioner until March 31, 2019.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State) 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 liabilities not contemplated at the time of entering into agreements. The State submitted revised guidelines issued by the 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 arising from the change in tax regime from VAT to GST for works contracts entered into before July 1, 2017, but executed partly or wholly thereafter? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, which allegedly caused the grievance, is liable to be quashed? Petitioner's contention: The petitioner argued that due to the introduction of GST, they are required to pay taxes that were not envisaged when the agreements were made, leading to a financial burden. They sought reimbursement for 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 issues related to works contracts under GST and superseded the earlier memorandum. The State relied on these revised guidelines.