M/S. Sanjit Kumar Jena vs. State Of Odisha

Held

The Court noted that the issue of differential tax amounts for works contracts due to the GST transition had been a subject of multiple writ petitions. The State Government had issued revised guidelines on December 10, 2018, to address the grievances of contractors who had entered into agreements before July 1, 2017, but executed the work partly or wholly thereafter. These guidelines outlined a detailed procedure for calculating the revised GST-inclusive work value for the balance work, including ascertaining quantities, determining revised rates as per the Revised SoR-2014, applying tender premium/discount, adding applicable GST, and signing supplementary agreements. If the revised GST-inclusive work value exceeded the original agreement value for the balance work, the contractor was to be reimbursed. Conversely, if it was less, the payment would be reduced, or excess payments recovered. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, which the authority was to consider and dispose of in light of the revised guidelines dated December 10, 2018, expeditiously, preferably by November 27, 2020. The Court also stated that if the petitioner was aggrieved by the authority's decision, they could challenge it further. No coercive action was to be taken against the petitioner until November 27, 2020.

Facts

The petitioner, a works contractor, challenged the State'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 the GST liability was not anticipated when the agreement was entered into. The State had issued initial guidelines on December 7, 2017, regarding works contracts under GST. Subsequently, revised guidelines were issued by the Government of Odisha, Finance Department, on December 10, 2018, superseding the earlier ones. These revised guidelines provided a procedure for determining the payable amount to works contractors for balance work executed after GST implementation, considering revised rates and applicable GST.

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 this date on the basis of the Schedule of Rates – 2014 (SoR-2014)? Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an unforeseen tax liability not envisaged at the time of entering into the agreement, and therefore, they should be reimbursed for this differential tax amount. They relied on the fact that their writ petition was identical to other pending writ petitions on the same issue. Revenue's Contention: The State (Opposite Parties) did not explicitly argue against the petitioner's claim but instead filed an Additional Counter Affidavit annexing revised guidelines issued by the Finance Department, Government of Odisha, on December 10, 2018. These guidelines provided a framework for addressing the issue of differential tax amounts for works contracts executed post-GST implementation.