Hemanta Kumar Sharma vs. The Executive Engineer Rural Works Division No-Iii

Held

The Court noted that the issue had been decided in several previous cases. The State submitted revised guidelines issued by the Finance Department 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 work value as per the revised Schedule of Rates (SoR-2014), apply tender premium/discount, and add the applicable GST rate. If the revised GST-inclusive work value is higher than the original agreement 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, expeditiously, preferably by February 29, 2020. No coercive action was to be taken against the petitioner until that date. The Court expressly left undecided the specific outcome of the petitioner's representation.

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 from 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 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 thereafter? 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 by the Finance Department on December 10, 2018, which provide a procedure for determining the amount payable to works contractors in such situations. These guidelines aim to address the claims of contractors for additional amounts towards GST on works put to tender before July 1, 2017, but executed after that date.