M/S.P.M.Contractors PVT.LTD vs. The Executive Engineer,Rural Irrigation Division

Held

The Court noted that the issue raised by the petitioner had been decided in several previous cases. The State submitted revised guidelines dated December 10, 2018, which provide a mechanism for works contractors to claim reimbursement of differential GST amounts. These guidelines outline a procedure to ascertain the balance work done after June 30, 2017, determine its revised estimated work value as per the Revised SoR-2014, and then add the applicable GST. If this revised GST-inclusive work value for the balance work is more than the original agreement work value for the balance work, the contractor is 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 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 that date.

Facts

The petitioner, a works 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, 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 before 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 tax regime (VAT), leading to an unforeseen tax liability. They sought reimbursement of this differential tax amount. Revenue/State's contention: The State contended that revised guidelines were issued on December 10, 2018, to address the concerns of contractors regarding works contracts under GST. 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.