M/S.Shiva Jyoti Construction vs. State Of Odisha

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount due to the GST regime change. It noted that the State had issued revised guidelines on 10.12.2018 to address such issues for works contracts entered into before 01.07.2017 but executed thereafter. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority is to consider and dispose of this representation in light of the revised guidelines dated 10.12.2018 as expeditiously as possible, preferably by 31.03.2019. The Court stated that if the petitioner is aggrieved by the authority's decision, they are at liberty to challenge it. No coercive action is to be taken against the petitioner until 31.03.2019. The Court did not expressly decide on the validity of the earlier memorandum dated 07.12.2017, but the revised guidelines effectively superseded it.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State authorities) 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 Clause 1(iii) of the Finance Department Memorandum dated 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 the earlier memorandum, to address issues related to works contracts under GST.

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 partly or wholly after 01.07.2017? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated 07.12.2017, which allegedly caused the grievance, is liable to be quashed? Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not contemplated at the time of entering into the agreements, and therefore, they are entitled to reimbursement of this differential tax amount. They sought to quash the impugned clause of the earlier memorandum that likely led to the denial of such reimbursement. Revenue's Contention: The Additional Government Advocate submitted that the Government had issued revised guidelines on 10.12.2018 to address the issues faced by contractors regarding works contracts under GST, superseding the earlier memorandum.