M/S. Biraja Construction vs. State Of Odisha

Held

The Court acknowledged that the issue of difficulties faced by contractors due to the change in tax regime for works contracts under GST was a recurring one. The Court noted the revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, which provided a detailed procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, on tenders invited before that date. 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 aforesaid revised guidelines expeditiously, preferably within three months. 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 for three months.

Facts

The petitioner, a works contractor, challenged the State's action 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's grievance was that they were required to pay GST on contracts entered into before the GST regime, which was not initially envisaged. The State 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 tenders invited prior to that date.

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? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden not contemplated at the time of entering into the agreements. They sought reimbursement of this differential tax amount. State's contention: The State did not dispute the petitioner's position regarding the identical nature of the case to a previously decided writ petition. The State had issued revised guidelines to address such issues, which were placed before the Court. The State's stance was implicitly that the revised guidelines provided the mechanism for resolving such claims.