M/S.P.M.Contractors PVT.LTD vs. The Executive Engineer,Mahanadi North Division

Held

The Court disposed of the writ petition by directing the petitioner to make a comprehensive representation before the appropriate authority within four weeks. The authority is to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by February 29, 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 is to be taken against the petitioner until February 29, 2020. The Court did not decide the substantive claim for reimbursement but provided a procedural path for its resolution based on the existing government guidelines.

Facts

The petitioner, a 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's grievance was that they were required to pay GST on contracts entered into before the GST regime, which was not initially envisaged. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines addressed the issue of works contracts executed partly or wholly after July 1, 2017, for tenders invited before that date.

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 entered into prior to July 1, 2017, but executed thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an unforeseen tax liability for contracts awarded under the previous VAT regime, necessitating reimbursement of the differential tax amount. Revenue's contention: The State contended that revised guidelines were issued on December 10, 2018, to address such situations. These guidelines provide a procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, and stipulate reimbursement if the revised value exceeds the original agreement value. The State relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated 10.12.2018.