M/S. Mahavir Infra Developers PVT.LTD vs. The Executive Engineer,Rural Works Division

Held

The Court noted that the issue involved had been decided in several previous cases. The State presented revised guidelines issued by the Finance Department on December 10, 2018, which superseded earlier guidelines. These revised guidelines outline a procedure for works contracts where tenders were invited before July 1, 2017, but payments for the balance work were made after the implementation of GST. The procedure involves determining the balance work quantity and its value as per the original agreement (based on pre-revised SoR-2014), then calculating the revised estimated work value for the balance work as per the Revised SoR-2014, adjusting for tender premium/discount, and finally adding the applicable GST rate. If the revised GST-inclusive work value for the balance work exceeds the original agreement value, the contractor is to be reimbursed for the excess. Conversely, if it is less, the payment is reduced, and any excess payment made is to be recovered. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, which the authority must consider and dispose of in light of the revised guidelines dated December 10, 2018, preferably by February 29, 2020. No coercive action was to be taken against the petitioner until February 29, 2020.

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 from 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 originally envisaged. The State submitted that revised guidelines were issued by the Finance Department of the Government of Odisha on December 10, 2018, to address issues related to works contracts under GST, superseding earlier guidelines.

Key Issues

1. Whether the petitioner is entitled to reimbursement of differential tax amounts arising from the change in tax regime from VAT to GST for works contracts entered into prior to July 1, 2017, but executed partly or wholly after that date? Petitioner's contention: The petitioner argued that they are required to pay GST on contracts where the agreement was made under the previous VAT regime, leading to an unforeseen tax burden. They sought reimbursement of this differential tax amount. Revenue's contention: The State contended that revised guidelines were issued by the Finance Department on December 10, 2018, which provide a procedure for determining the amount payable to works contractors in such situations. These guidelines aim to address the claims for additional amounts towards GST for works tendered before July 1, 2017, but executed thereafter.