M/S. Haraparbati Construction vs. State Of Odisha

Held

The Court acknowledged that the issue pertains to difficulties faced by contractors due to the change in tax regime for works contracts under GST. The State of Odisha had issued revised guidelines on December 10, 2018, to address representations from contractors claiming additional amounts towards GST for works tendered before July 1, 2017, but executed after that date. These guidelines outlined a procedure to ascertain the balance work's GST-inclusive value based on the revised SoR-2014 and the original agreement's tender premium/discount. If the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that balance work, the contractor was to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority was directed to consider and dispose of the representation in light of the revised guidelines dated December 10, 2018, expeditiously, 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 works contractor, challenged the State of Odisha's action in 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 the balance work executed after June 30, 2017, and stipulated reimbursement if this value exceeded the original agreement value.

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 tenders were invited prior to that date based on the Schedule of Rates – 2014 (SoR-2014)? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden not contemplated at the time of entering into the agreements. They sought reimbursement of this additional tax amount. Revenue's contention: The State of Odisha, through its Finance Department, had issued revised guidelines on December 10, 2018, which provided a mechanism to address the financial implications of the GST transition for works contracts. The State's action was in line with these revised guidelines.