M/S. Haraparbati Construction vs. State Of Odisha

Held

The Court noted that the issue involved difficulties faced by contractors due to the change in tax regime for works contracts under GST. The State had issued revised guidelines on December 10, 2018, to address representations from contractors claiming additional amounts for GST on works tendered before July 1, 2017, but executed after that date. These guidelines outlined a procedure to determine the GST-inclusive work value for the balance work, considering the revised SoR-2014 and any tender premium/discount. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks. 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 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. The writ petition was disposed of with these directions.

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 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 GST implementation, based on the revised Schedule of Rates (SoR-2014).

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 executed partly or wholly after July 1, 2017, when the tender was invited prior to that date on the basis of SoR-2014. Petitioner's contention: The petitioner argued that the introduction of GST resulted in an unexpected tax liability not envisaged at the time of entering into the agreement, and therefore, they should be reimbursed for the differential tax amount. The petitioner relied on the fact that the writ petition was identical to a previously filed petition (W.P.(C) No.18868 of 2020) and sought disposal in terms of that order. Revenue/State's contention: The State, through the Additional Government Advocate, did not explicitly argue against the petitioner's claim but instead filed an Additional Counter Affidavit annexing revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, which addressed the issue of works contracts under GST.