M/S.Big Build Infrastructure And Co. vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, superseding the earlier memorandum dated December 7, 2017. These revised guidelines provide a detailed procedure for determining the GST-inclusive work value for the balance work executed after the GST implementation, where tenders were invited prior to July 1, 2017. The procedure involves ascertaining the work done after June 30, 2017, determining its revised estimated work value as per the Revised SoR-2014, adjusting for tender premium/discount, and then adding the applicable GST rate. The guidelines stipulate that if the revised GST-inclusive work value is more than the original agreement value for the balance work, the 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, which the authority would consider and dispose of in light of the revised guidelines dated December 10, 2018, preferably by March 31, 2019. The Court also stated that if the petitioner is aggrieved by the authority's decision, they can 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 opposite parties' action of 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 a Finance Department Memorandum dated December 7, 2017. The grievance was that the GST liability was not anticipated when the 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 arising from the change in tax regime from VAT to GST for works contracts tendered before July 1, 2017, but executed partly or wholly after that date? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, is liable to be quashed? The petitioner argued that due to the introduction of GST, they are required to pay taxes that were not envisaged at the time of entering into the agreements, leading to a financial burden. The State contended that revised guidelines have been issued to address such issues, superseding the previous memorandum. The State relied on the Office Memorandum dated December 10, 2018, which provides a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and for reimbursement or recovery of excess amounts.