Bhagawan Parida vs. State Of Odisha

Held

The Court noted that the State of Odisha had issued revised guidelines on December 10, 2018, to address the issue of works contracts under GST, particularly for tenders invited before July 1, 2017, but executed thereafter. These guidelines outlined a procedure to ascertain the balance work done after June 30, 2017, determine its revised estimated work value as per the Revised SoR-2014 (excluding embedded taxes), add the applicable GST, and then compare this GST-inclusive value with the original agreement value. If the revised GST-inclusive value was higher, the contractor was to be reimbursed; if lower, payment was to be reduced, and excess payments recovered. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority was instructed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by December 18, 2020. The Court also granted a stay on coercive action against the petitioner until December 18, 2020. The issue of whether the petitioner was *automatically* entitled to reimbursement without following the representation process was not expressly decided, but the path for resolution was laid out.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State of Odisha and Commissioner of CGST) for 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 argued that the GST liability was not envisaged when the agreement was entered into. The State Government had issued revised guidelines on December 10, 2018, superseding earlier guidelines, to address the difficulties faced by contractors regarding works contracts under GST. These guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated reimbursement or recovery based on the comparison with 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 the tender was invited prior to this date. Petitioner's contention: The petitioner argued that the introduction of GST resulted in a tax liability that was not anticipated at the time of entering into the agreement, and therefore, they should be reimbursed for this additional cost. They relied on the fact that their writ petition was identical to a previously filed one and sought disposal in terms of that order. Revenue/State's contention: The State of Odisha had issued revised guidelines on December 10, 2018, which provided a mechanism for calculating the GST-inclusive work value for balance work and determining the amount payable to the contractor. The State's counsel was present, and the revised guidelines were placed on record.