Aftab Ahammad vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, in supersession of the earlier memorandum dated December 7, 2017. These revised guidelines provided a comprehensive procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, for contracts tendered before July 1, 2017. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that balance work, 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 to 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 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 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 authorities) 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 a 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 their agreements. The State submitted revised guidelines dated December 10, 2018, superseding the earlier memorandum, which provided a procedure for calculating and reimbursing GST on works contracts tendered before July 1, 2017, but executed partly or wholly thereafter.

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 thereafter? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, 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 when the agreements were finalized. They sought reimbursement for this additional tax liability. Revenue's Contention: The revenue submitted that the Government of Odisha had issued revised guidelines on December 10, 2018, which addressed the issue of works contracts under GST. These guidelines provided a mechanism for determining and reimbursing the differential tax amount for works executed after the GST implementation but tendered before it. The revenue relied on these revised guidelines.