M/S. Haraparbati Construction vs. State Of Odisha

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount arising from the GST implementation. It noted that the Government of Odisha, Finance Department, had issued revised guidelines on December 10, 2018, to address such issues for works contracts. These guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, where tenders were invited 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 contractor would be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, and the authority was directed to consider and dispose of the representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by December 24, 2020. 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 December 24, 2020.

Facts

The petitioner, a contractor, challenged the State's 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 argued that the GST liability was not anticipated when the agreement was entered into. The State had issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address issues related to 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, and stipulated reimbursement if the revised value exceeded the original agreement value.

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 executed partly or wholly after July 1, 2017, when tenders were invited prior to that date. Petitioner's contention: The petitioner argued that the introduction of GST resulted in an unforeseen tax liability, as the original agreements were based on the pre-GST tax regime. They sought reimbursement for this additional tax burden. Revenue's contention: The State's position was addressed through the issuance of revised guidelines by the Finance Department. These guidelines, dated December 10, 2018, provided a mechanism for calculating the GST-inclusive work value for balance work and for reimbursement or recovery of amounts based on this calculation. The State relied on these revised guidelines as the framework for addressing such claims.