Ganesh Majhi vs. The Executive Engineer,Nabarangpur

Held

The Court noted that the issue had been decided in several previous cases. The State had issued revised guidelines on December 10, 2018, to address the concerns of contractors regarding works contracts executed after the GST implementation but tendered before it. These guidelines outlined a procedure to ascertain the balance work done after June 30, 2017, determine its revised estimated work value as per the Revised Schedule of Rates (SoR-2014) and tender premium/discount, and then add the applicable GST. If this revised GST-inclusive work value for the balance work was more than the original agreement work value for that balance work, the contractor was to be reimbursed for the excess amount. 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 February 29, 2020. No coercive action was to be taken against the petitioner until that date. The Court expressly left undecided the specific outcome of the petitioner's representation.

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 works contracts entered into before the GST regime, which was not anticipated when the agreements were made. The State submitted that revised guidelines were issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address such issues concerning works contracts under 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 entered into prior to July 1, 2017, but executed partly or wholly thereafter? The petitioner argued that the introduction of GST created an unforeseen tax liability on works contracts, for which they should be compensated. The State contended that revised guidelines were issued by the Finance Department on December 10, 2018, to address the claims of contractors for additional amounts towards GST on works put to tender before July 1, 2017, but executed after that date. These guidelines provided a procedure for determining the GST-inclusive work value for the balance work and stipulated reimbursement if the revised value exceeded the original agreement value.