M/S. Haraparbati Construction vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, to address the grievances of contractors regarding works contracts executed under the GST regime. These guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, based on original agreements predating July 1, 2017. The procedure involved ascertaining the work value as per the original agreement, determining the revised estimated work value as per the revised Schedule of Rates (SoR-2014), adjusting for tender premium/discount, and then adding the applicable GST rate. The guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value, the contractor was to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, which the authority was to consider and dispose of in light of the revised guidelines dated December 10, 2018, expeditiously, preferably by December 24, 2020. No coercive action was to be taken against the petitioner until that date.

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 GST implementation, based on original agreements predating July 1, 2017.

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 the tender was invited prior to that date. Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an unforeseen tax liability that was not envisaged at the time of entering into the agreement. They sought reimbursement of this differential tax amount. Revenue's Contention: The State submitted revised guidelines issued by the Finance Department on December 10, 2018, which provided a framework for calculating and reimbursing differential tax amounts for works contracts executed under the new GST regime. The State relied on these revised guidelines to address the grievance.