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 differential tax amounts for works contracts executed after the implementation of GST, for tenders invited prior to July 1, 2017. These guidelines provided a mechanism for ascertaining the balance work quantity and value as per the original agreement (based on pre-revised SoR-2014), determining the revised estimated work value as per the Revised SoR-2014, adjusting it by the tender premium/discount, and then adding the applicable GST rate. If the revised GST-inclusive work value for the balance work was higher than the original agreement 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, as expeditiously as possible, preferably by December 24, 2020. No coercive action was to be taken against the petitioner until that date. The writ petition was disposed of with liberty to the petitioner to challenge the authority's decision if aggrieved.

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 argued that the GST regime imposed taxes not anticipated when agreements were entered into. The State had issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address difficulties faced by contractors regarding works contracts under GST. These revised guidelines provided a procedure for determining the amount payable to contractors for balance work executed after July 1, 2017, based on 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 partly or wholly thereafter? The petitioner contended that the introduction of GST resulted in an increased tax burden that was not envisaged at the time of entering into agreements. They sought reimbursement for this additional tax liability. The State, through its Finance Department, had issued revised guidelines on December 10, 2018, to address such claims. These guidelines outlined a procedure for calculating the GST-inclusive work value for the balance work and provided for reimbursement if the revised value exceeded the original agreement value, or recovery if it was less. The petitioner relied on these revised guidelines to support their claim.