M/S.P.M.Contractors, PVT.LTD vs. The Executive Engineer,Potteru Canal Division

Held

The Court noted that the issue had been decided in previous similar cases. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority was directed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by February 29, 2020. The Court also stated that if the petitioner was aggrieved by the authority's decision, they could challenge it. No coercive action was to be taken against the petitioner until February 29, 2020. The Court did not explicitly decide on the entitlement to reimbursement but provided a procedural path for resolution based on the existing guidelines.

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 contracts entered into before the GST regime, which was not initially envisaged. The State submitted that revised guidelines were issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines provided a procedure for determining the tax-inclusive work value for balance work executed after GST implementation, allowing for reimbursement if the revised value exceeded the original agreement value.

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 the introduction of GST resulted in an additional tax burden not contemplated at the time of entering into the agreements, and therefore, they should be reimbursed for this differential tax amount. Revenue/State's contention: The State argued that revised guidelines were issued on December 10, 2018, which provide a mechanism for calculating the GST-inclusive work value for balance work. These guidelines allow for reimbursement of excess amounts if the revised GST-inclusive work value exceeds the original agreement value, and for recovery if it is less. The State relied on the Finance Department's Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated 10.12.2018.