M/S. Mahavir Infra Developers PVT.LTD vs. The Executive Engineer, Rural Works Division

Held

The Court noted that the issue had been decided in similar previous matters. The State submitted revised guidelines issued on December 10, 2018, which provided a detailed procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, for contracts tendered before that date. These guidelines allow for reimbursement to the works contractor if the revised GST-inclusive work value for the balance work is more than the original agreement work value for that balance work. 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 February 29, 2020. The Court did not expressly leave any issue undecided.

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 initially envisaged. The State submitted that revised guidelines were issued by the Finance Department on December 10, 2018, superseding earlier guidelines, to address difficulties faced by contractors regarding works contracts under GST. These guidelines provided a procedure for determining the tax-inclusive work value for balance work executed after GST implementation.

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 they are required to pay GST on works contracts that were agreed upon before the GST regime, an expense not originally factored into the contract price. They sought reimbursement for this additional tax burden. Revenue/State's contention: The State contended that revised guidelines were issued on December 10, 2018, by the Finance Department, Government of Odisha, to address such issues. These guidelines provide a mechanism for calculating the GST-inclusive work value for the balance work and stipulate reimbursement if the revised value exceeds the original agreement value.