Aftab Ahammad 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 executed after July 1, 2017, for contracts tendered before that date. The guidelines stipulated that if the revised GST-inclusive work value for the balance work was more than the original agreement work value for that balance work, the works 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 within four weeks, ventilating their grievance. The authority was directed to consider and dispose of the 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. The issue of quashing Clause 1(iii) of the earlier memorandum was implicitly addressed by the issuance and application of the revised guidelines.

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 meant the petitioner had to pay taxes not originally envisaged in the agreements. The State submitted revised guidelines dated December 10, 2018, superseding the earlier memorandum, which provided a procedure for determining and reimbursing the differential GST amount for works contracts tendered before July 1, 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 before July 1, 2017, but executed thereafter? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, which allegedly denied such reimbursement, is liable to be quashed? 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 works contracts, and therefore, they should be reimbursed for this differential tax amount. They sought to quash the impugning clause of the memorandum that likely prevented such reimbursement. Revenue's Contention: The Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which provided a mechanism for addressing the claims of contractors for additional amounts towards GST on works put to tender prior to July 1, 2017, but executed thereafter. This submission implies that the revised guidelines offer a remedy to the petitioner's grievance.