Kiran Kumar Das vs. State Of Odisha

Held

The Court acknowledged the issue faced by contractors due to the GST transition. The Revenue presented revised guidelines dated December 10, 2018, which superseded the earlier memorandum and provided a detailed procedure for calculating and reimbursing the differential GST amount for works contracts. These guidelines stipulated that for works tendered before July 1, 2017, but paid for after GST implementation, a revised GST-inclusive work value for the balance work should be determined. If this revised value exceeded the original agreement value for the balance work, 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 to the appropriate authority, which would then consider and dispose of the representation in light of the revised guidelines dated December 10, 2018, preferably by March 31, 2019. The Court explicitly stated that if the petitioner remained 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 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 the Finance Department Memorandum dated December 7, 2017. The core grievance was that the GST liability was not envisaged when the agreement was entered into. The Revenue 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 entered into before July 1, 2017, but executed partly or wholly after that date? Petitioner's contention: The petitioner argued that they are required to pay GST, a tax not contemplated at the time of entering into the agreement, and therefore, they should be reimbursed for this additional tax burden. They relied on the principle that tax liabilities should not be imposed retrospectively or in a manner that was not foreseen in the contractual terms. 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 after the GST implementation, based on revised Schedule of Rates (SoR-2014).