M/S.Hemanta Agrawal And Co. vs. The Executive Engineer. Ret Dam Division

Held

The Court noted that the issue had been decided in several previous cases. The State's counsel submitted revised guidelines issued by the Finance Department on December 10, 2018, which address the concerns of contractors regarding works contracts executed after the GST implementation but tendered before it. These guidelines outline a procedure to determine the GST-inclusive work value for the balance work, considering the revised Schedule of Rates (SoR-2014) and any tender premium/discount. If the revised GST-inclusive work value exceeds the original agreement value for the balance work, the contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment 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, 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 from 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 originally envisaged in the contract terms. 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 after that date? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not contemplated when the agreements were made, and therefore, they should be reimbursed for this differential tax amount. Revenue/State's contention: The State contended that revised guidelines were issued on December 10, 2018, which provide a procedure for determining the payable amount to works contractors in such situations. These guidelines aim to address the claims of contractors for additional amounts towards GST for works tendered before July 1, 2017, but executed thereafter.