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

Held

The Court noted that the issue had been decided in several previous cases. The State submitted revised guidelines dated December 10, 2018, issued by the Finance Department, Government of Odisha, which provide a framework for addressing the differential tax amount for works contracts entered into before July 1, 2017, but executed thereafter. These guidelines outline a procedure to determine the GST-inclusive work value for the balance work, considering the original agreement rates and revised rates under GST. 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 is 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.

Facts

The petitioner, a 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 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 envisaged in the original agreements. The State submitted that revised guidelines were issued by the Finance Department of the Government of Odisha on December 10, 2018, superseding earlier guidelines, to address issues related to 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 not accounted for in the original agreements, necessitating reimbursement of the differential tax amount. Revenue/State's contention: The State contended that revised guidelines were issued on December 10, 2018, by the Finance Department, Government of Odisha, which provide a procedure for determining the amount payable to works contractors in such situations. These guidelines superseded earlier ones and addressed the issue of GST on works contracts executed post-GST implementation but tendered prior to it.