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 issued on December 10, 2018, which provide a detailed procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, for contracts tendered before that date. These guidelines outline how to ascertain the balance work's value as per the revised Schedule of Rates (SoR-2014), apply tender premium/discount, and then add the applicable GST rate. If the revised GST-inclusive work value for the balance work is more than the original agreement value for that balance work, the contractor is to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation before 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 any potential challenges to the authority's decision.

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 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, to address issues related to works contracts under GST.

Key Issues

1. Whether the petitioner is entitled to reimbursement of the differential tax amount due to 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 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 contended that revised guidelines were issued on December 10, 2018, which provide a procedure for determining the amount payable to works contractors in such situations. These guidelines were issued in supersession of earlier ones and were intended to address the representations received from contractors claiming additional amounts towards GST.