Sunil Kumar Mohanty vs. State Of Odisha

Facts

The Petitioner, a contractor, filed a writ petition challenging the inaction of the Opposite Parties in reimbursing the differential tax amount. This arose due to the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) effective from July 1, 2017. The Petitioner's grievance is that the introduction of GST imposed a tax liability not anticipated when the agreement (Agreement No.40P1 of 2017-18) was entered into. The Petitioner sought disposal of the present writ petition in terms of a previous order in an identical writ petition, W.P.(C) No.5933 of 2020. The State-Opposite Parties did not dispute this position. The Court was informed that a batch of writ petitions were being filed on this issue concerning works contracts under GST.

Held

The Court did not decide the core issue of entitlement to reimbursement of the differential tax amount. Instead, following the submission of the Petitioner and the lack of dispute from the State, the Court directed the Petitioner to make a comprehensive representation before the Executive Engineer, Rural Works Division-II, Ganjam Berhampur (Opposite Party No.4) within two weeks. Opposite Party No.4 was directed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by April 15, 2021. The Court stated that if the Petitioner remained aggrieved by the decision of the authority, it would be open to challenge the same in accordance with law. No coercive action was to be taken against the Petitioner by the Executive Engineer until April 15, 2021. The issue of the tax regime change and its impact on existing contracts was implicitly acknowledged as a matter requiring consideration under the revised guidelines.

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, considering the agreement was executed prior to the GST implementation? (Question of law) The Petitioner argued that the introduction of GST resulted in a tax liability that was not envisaged at the time of entering into the agreement, causing financial hardship. The Petitioner relied on the principle that such unforeseen tax burdens should be addressed, especially in existing contracts. The Petitioner also submitted that the present writ petition is identical to W.P.(C) No.5933 of 2020 and should be disposed of in terms of the order passed therein. The Revenue (State-Opposite Parties) did not dispute the Petitioner's submission regarding the similarity of the case to W.P.(C) No.5933 of 2020 and did not present any counter-arguments on the merits of the tax reimbursement claim.