Manoj Kumar Maharana vs. The State Of Odisha

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, in supersession of the earlier memorandum dated December 7, 2017. These revised guidelines provide a procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, for contracts where tenders were invited before July 1, 2017. The guidelines stipulate that if the revised GST-inclusive work value for the balance work exceeds the original agreement work value for that balance work, the works contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment made is to be recovered. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority is to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, expeditiously, preferably by the end of December 2020. The Court also stated that if the petitioner is aggrieved by the authority's decision, they are free to challenge it. No coercive action was to be taken against the petitioner until the end of December 2020.

Facts

The petitioner, a contractor, filed a writ petition challenging the action of the opposite parties 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 also sought to quash Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017. The grievance stemmed from the requirement to pay GST on works contracts, which was not anticipated when agreements were entered into under the previous tax regime. The State's counsel submitted that a similar matter was decided by the Court on December 12, 2018, where revised guidelines for works contracts under GST were presented.

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 after that date? Petitioner's contention: The petitioner argued that the introduction of GST necessitated paying taxes that were not envisaged at the time of entering into the agreements, leading to a financial burden. They sought reimbursement of this differential tax amount. Revenue/State's contention: The State submitted that revised guidelines were issued by the Finance Department on December 10, 2018, superseding the earlier memorandum dated December 7, 2017. These revised guidelines address the issue of works contracts under GST, particularly for tenders invited before July 1, 2017, but executed thereafter. The State relied on the revised guidelines and a previous High Court decision in a similar matter (W.P.(C) No.12244 of 2018).