Mukesh Kumar vs. The Executive Engineer, Bargarh (R And B) Division

Held

The Court noted that the issue of differential tax amounts for works contracts due to the GST transition had been a subject of several writ petitions. The State had issued revised guidelines on December 10, 2018, to address the difficulties faced by contractors. These guidelines provided a detailed procedure for calculating the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated that contractors should be reimbursed if the revised GST-inclusive work value exceeded the original agreement value for the balance work. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, ventilating their grievance. The authority was directed 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 was aggrieved by the authority's decision, they could 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 contractor, filed a writ petition challenging 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's grievance was that they were required to pay GST on works contracts entered into before the GST regime, which was not envisaged in the original agreements. The State had issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address such issues concerning works contracts under GST. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated reimbursement if the revised value exceeded the original agreement value.

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 executed partly or wholly after July 1, 2017, when the tender was invited prior to that date. Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden not contemplated at the time of entering into the agreements, and therefore, they should be reimbursed for this differential tax amount. They relied on the fact that the present writ petition is identical to a previously decided writ petition (W.P.(C) No.10556 of 2019). Revenue/State's contention: The State did not dispute the petitioner's position and acknowledged the existence of revised guidelines issued by the Finance Department to address such grievances.