Gajendra Prasad Panda vs. State Of Orissa

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, superseding the earlier ones dated December 7, 2017. These revised guidelines provided a detailed procedure for determining the GST-inclusive work value for balance work on contracts tendered before July 1, 2017, but executed thereafter. The procedure involves ascertaining the work done after June 30, 2017, determining its revised estimated work value as per the Revised Schedule of Rates (SoR-2014), adjusting it for tender premium/discount, and then adding the applicable GST. The guidelines stipulate that if the revised GST-inclusive work value is higher than the original agreement value for the balance work, the contractor is to be reimbursed for the excess. Conversely, if it is lower, the payment is to be reduced, and any excess payment recovered. The Court directed the petitioner to make a comprehensive representation to the appropriate authority, who would consider and dispose of it in light of these revised guidelines by March 31, 2019. The Court also stated that if the petitioner remained aggrieved, they could challenge the authority's decision. No coercive action was to be taken against the petitioner until March 31, 2019. The issue of the validity of the earlier clauses was implicitly addressed by the acceptance and application of the revised guidelines.

Facts

The petitioner, a works contractor, filed a writ petition challenging the State's 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 challenged specific clauses of Finance Department Memoranda dated July 22, 2017, and December 7, 2017. The core grievance was that the introduction of GST imposed tax liabilities not originally contemplated in agreements entered into prior to the GST regime. The State submitted revised guidelines issued on December 10, 2018, which superseded the earlier ones and provided a procedure for determining the GST-inclusive work value for balance work executed after June 30, 2017, on contracts tendered before July 1, 2017.

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 July 1, 2017, but executed partly or wholly thereafter? 2. Whether Clause 6 of the Finance Department Memorandum dated July 22, 2017, and Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, are valid and applicable in light of the transition to GST? Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not factored into the original contract prices, leading to a financial disadvantage. They sought reimbursement of this differential tax amount. Revenue's Contention: The Additional Government Advocate submitted that the Government of Odisha had issued revised guidelines on December 10, 2018, to address the difficulties faced by contractors due to the GST implementation. These revised guidelines provided a mechanism for calculating the GST-inclusive work value for balance work and for reimbursement or recovery of amounts based on this calculation.