M/S. Haraparbati Construction vs. State Of Odisha

Held

The Court held that the petitioner should make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority is directed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by December 24, 2020. The Court stated that if the petitioner is aggrieved by the decision of the authority, it would be open for them to challenge it. No coercive action was to be taken against the petitioner until December 24, 2020. The Court did not decide the substantive claim for reimbursement but provided a procedural path for its resolution.

Facts

The petitioner, a works contractor, challenged the State of Odisha'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 GST was not envisaged when the agreement was entered into, leading to an increased tax burden. 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 tenders invited before July 1, 2017.

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. Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an additional tax liability that was not contemplated at the time of entering into the agreement, and therefore, they should be reimbursed for this differential tax amount. They relied on the principle that contractual obligations should not be unilaterally altered to the detriment of a party due to a change in tax laws. Revenue's Contention: The State (Opposite Parties) submitted that revised guidelines were issued by the Finance Department on December 10, 2018, which provided a mechanism for calculating and reimbursing the differential tax amount for works contracts executed under such circumstances. They indicated that the petitioner should approach the appropriate authority under these guidelines.