M/S Bhanjadeo Constructions vs. State Of Odisha

Held

The Court noted that the Petitioner's grievance was identical to that in W.P.(C) No.5933 of 2020, which was disposed of on February 18, 2020. The Court acknowledged the revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, which provide a detailed procedure for determining the GST-inclusive work value for balance work on contracts tendered before July 1, 2017. The Court directed the Petitioner to make a comprehensive representation to 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 December 10, 2018, as expeditiously as possible, preferably within three months of receiving a certified copy of the order. The Petitioner retains the liberty to challenge the authority's decision if aggrieved. No coercive action is to be taken against the Petitioner until a decision is reached. The Court did not decide the ultimate entitlement to reimbursement but provided a procedural path for resolution.

Facts

The Petitioner, M/s. Bhanjadeo Constructions, filed a writ petition challenging the Opposite Parties' 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's grievance stems from having to pay GST on works contracts entered into before the GST regime, where such tax was not originally envisaged. The State of Odisha, through the Finance Department, had issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address difficulties faced by contractors regarding works contracts under GST. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, on contracts tendered prior to that date.

Key Issues

1. Whether the Petitioner is entitled to reimbursement of the differential tax amount due to 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? (Question of law and fact, concerning the impact of GST transition on existing contracts). Petitioner's contention: The Petitioner argued that they are required to pay GST on works contracts that were agreed upon before the GST regime, an expense not originally contemplated, and therefore, they are entitled to reimbursement of this differential tax amount. They relied on the principle that unforeseen tax liabilities arising from a change in law should be compensated. Revenue/State's contention: The Opposite Parties (State of Odisha and Ors.) submitted that revised guidelines were issued by the Finance Department on December 10, 2018, to address such issues. These guidelines provide a mechanism for calculating the GST-inclusive work value for balance work and stipulate whether the contractor is to be reimbursed or if payment is to be reduced based on the revised calculation.