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 issue of works contracts executed after the implementation of GST for tenders invited prior to July 1, 2017. These guidelines outlined a procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017. Crucially, point (vii) of these guidelines stipulated that if the revised GST-inclusive work value for the balance work was more than the original agreement work value for that balance work, the works contractor was to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation to the appropriate authority, which would then consider and dispose of it in light of these revised guidelines dated December 10, 2018, expeditiously.

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 from 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 originally envisaged. The State had issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address such issues for works contracts executed partly or wholly after July 1, 2017, for tenders invited before that date.

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 entered into prior to July 1, 2017, but executed thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden not contemplated in the original agreements, and therefore, they should be reimbursed for this differential tax amount. They relied on the principle that the State should not benefit from a change in law that imposes an unforeseen financial burden on contractors. Revenue/State's contention: The State submitted that revised guidelines were issued on December 10, 2018, to address the concerns of contractors regarding works contracts executed post-GST, for tenders invited pre-GST. These guidelines provided a procedure for determining and reimbursing any excess amount payable to the contractor if the revised GST-inclusive work value exceeded the original agreement value.