Mukesh Kumar vs. The Executive Engineer, Rwd, Jharsuguda

Held

The Court acknowledged that the issue of difficulty faced by contractors due to the change in the tax regime for works contracts under GST was a recurring one. It noted the issuance of revised guidelines by the Government of Odisha, Finance Department, on December 10, 2018. The Court directed the petitioner to make a comprehensive representation to 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 November 20, 2020. The Court also stated that if the petitioner remained aggrieved by the authority's decision, they would be at liberty to challenge it. No coercive action was to be taken against the petitioner until November 20, 2020. The writ petition was disposed of with these directions.

Facts

The petitioner, a works contractor, filed a writ petition challenging the State'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 contended that they were required to pay GST on contracts entered into before the GST regime, which was not initially envisaged. The State acknowledged the issue, which was common to a batch of similar writ petitions. The Court considered revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, superseding earlier guidelines from December 7, 2017.

Key Issues

1. Whether the petitioner is entitled to reimbursement of differential tax amounts 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? (Mixed question of law and fact, turning on the interpretation and application of the revised GST guidelines for works contracts). Petitioner's contention: The petitioner argued that the introduction of GST resulted in an unforeseen tax liability for contracts signed under the previous VAT regime, and they should be reimbursed for this differential tax amount. They relied on the fact that the issue was identical to a previously decided writ petition (W.P.(C) No.10556 of 2019) and sought disposal in terms of that order. State's contention: The State did not dispute the petitioner's position regarding the identical nature of the present petition to the earlier one. The State's counsel did not raise any counter-arguments against the petitioner's claim but implicitly accepted the need to address the issue in light of the revised guidelines.