Jayaram Pujahari vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on 10.12.2018 to address the grievances of works contractors regarding the differential tax amount arising from the transition to GST. These guidelines provided a detailed procedure for calculating the GST-inclusive work value for the balance work executed after 01.07.2017, where tenders were invited prior to that date. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that portion, 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 10.12.2018, preferably by 31.03.2019. 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 31.03.2019. The writ petition was disposed of with these directions.

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) on 01.07.2017. The petitioner also sought to quash specific clauses of Finance Department Memoranda dated 22.07.2017 and 07.12.2017. The grievance was that GST was payable on works contracts entered into before the GST regime, which was not envisaged in the original agreements. The State submitted revised guidelines dated 10.12.2018, superseding previous ones, to address issues related to works contracts under GST for tenders invited before 01.07.2017 but executed partly or wholly after that date.

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 prior to 01.07.2017 but executed thereafter? (Mixed question of law and fact, concerning the interpretation of contractual terms and the impact of the GST regime). Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not contemplated at the time of entering into the agreements, necessitating reimbursement of the differential tax amount. The petitioner relied on the principle that unforeseen tax liabilities arising from a change in law should be addressed to ensure contractual fairness. Revenue/State's contention: The State submitted revised guidelines issued by the Finance Department on 10.12.2018, which provided a procedure for determining and reimbursing the GST-inclusive work value for the balance work executed after 01.07.2017, in cases where tenders were invited before that date. The State argued that these revised guidelines offered a mechanism to resolve the petitioner's grievance.