Shashi Ram Mangaraj vs. The Executive Engineer,Rural Works Division

Held

The Court noted that the issue had been decided in several previous cases. The State's revised guidelines dated December 10, 2018, provide a framework for addressing the petitioner's grievance. These guidelines outline a procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017, based on the revised Schedule of Rates (SoR-2014) and the original agreement's tender premium/discount. If the revised GST-inclusive work value for the balance work exceeds the original agreement work value for that 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 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 expeditiously, preferably by February 29, 2020. No coercive action was to be taken against the petitioner until that date. The Court expressly left open the petitioner's right to challenge the authority's decision if aggrieved.

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 originally 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 they are required to pay GST on works contracts that were agreed upon before the introduction of GST, a tax liability not contemplated at the time of entering the agreement, and therefore, they should be reimbursed for this differential tax amount. Revenue/State's contention: The State submitted that revised guidelines have been issued by the Finance Department on December 10, 2018, which provide a procedure for determining the amount payable to works contractors in such scenarios. These guidelines aim to address the claims of contractors for additional amounts towards GST for works tendered before July 1, 2017, but executed thereafter.