Mahendra Kumar Pati vs. The Executive Engineer, Public Health Division-Ii, Ctc

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount due to the GST regime change. It noted that the Government of Odisha had issued revised guidelines on December 10, 2018, to address such issues for works contracts. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority was instructed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by January 21, 2021. The Court also stated that if the petitioner remained aggrieved by the authority's decision, they would be at liberty to challenge it. No coercive action was to be taken against the petitioner until January 21, 2021. The writ petition was disposed of with these directions.

Facts

The petitioner, a contractor, challenged the action of the opposite parties (State and CGST authorities) for not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) effective from July 1, 2017. The petitioner's grievance stemmed from being required to pay GST on contracts entered into before the GST regime, where such tax was not initially envisaged. The Court noted that this issue was common to a batch of writ petitions. The State filed an additional counter-affidavit annexing revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, concerning works contracts under GST, which superseded earlier guidelines.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 for works contracts entered into prior to July 1, 2017, but executed partly or wholly thereafter? The petitioner argued that the introduction of GST required them to pay taxes not contemplated at the time of entering into agreements, leading to financial hardship. They sought reimbursement of this additional tax burden. The revenue/State contended that revised guidelines were issued by the Government of Odisha on December 10, 2018, to address the grievances of contractors regarding works contracts under GST. These guidelines provided a procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, and stipulated reimbursement for excess amounts or recovery of underpayments.