N.K.Murugan Thevar vs. The Executive Engineer Sambalpur

Held

The Court noted that the issue had been decided in several previous cases. The State's counsel presented revised guidelines issued by the Finance Department on December 10, 2018, which provide a mechanism for calculating the GST-inclusive work value for the balance work executed after June 30, 2017, on contracts tendered before July 1, 2017. These guidelines stipulate that 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 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, ventilating their grievance. The authority is to consider and dispose of this representation 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, 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 from July 1, 2017. The petitioner contended that they were required to pay GST on works 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, 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 led to an additional tax burden not contemplated when agreements were made, and therefore, they should be reimbursed for this differential tax amount. Revenue's contention: The State submitted that revised guidelines were issued 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 on works tendered before July 1, 2017, but executed thereafter.