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 works contractors regarding the transition to GST. These guidelines provided a detailed procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated that if this revised value was higher than the original agreement value for the balance work, the contractor would be reimbursed for the excess amount. The Court found that the petitioner's grievance could be addressed by following these revised guidelines. Therefore, the Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks. 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 would be at liberty to challenge it. No coercive action was to be taken against the petitioner until December 24, 2020.

Facts

The petitioner, a works contractor, challenged the action of the opposite parties (State of Odisha) for 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 such issues concerning 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 for excess amounts.

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 created an unforeseen tax liability on contracts awarded before the GST regime, and they should be compensated for this differential tax amount. The petitioner relied on the principle that the State should not benefit from a change in tax law that imposes an additional burden on contractors for work done under pre-existing agreements. The revenue (State of Odisha) submitted that revised guidelines were issued by the Finance Department on December 10, 2018, which provided a mechanism for calculating the GST-inclusive work value for balance work and stipulated reimbursement if the revised value exceeded the original agreement value. The revenue contended that the petitioner should follow the procedure laid out in these revised guidelines by making a representation to the appropriate authority.