M/S.Hemanta Agrawal And Co. vs. The Executive Engineer, Uirc Division No.Iii

Held

The Court noted that the issue involved had been decided in previous similar cases. The State's counsel submitted revised guidelines issued by the Finance Department, Government of Odisha, on December 10, 2018, concerning works contracts under GST. These guidelines provided a procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, for contracts tendered before that date. If the revised GST-inclusive work value was more than the original agreement value for the balance work, the contractor was to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, ventilating their grievance. The authority was directed to consider and dispose of the 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. The Court expressly left undecided any issue beyond the scope of the representation and the revised guidelines.

Facts

The petitioner, a contractor, challenged the action of the State of Odisha in 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 anticipated in the original agreements. 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 such issues concerning 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? The petitioner argued that the introduction of GST created a financial burden not envisaged at the time of entering into agreements, necessitating reimbursement of the differential tax. The State contended that revised guidelines were issued on December 10, 2018, by the Finance Department, Government of Odisha, which provided a mechanism for determining and reimbursing additional amounts due to GST on balance works executed after July 1, 2017, for contracts tendered before that date. These guidelines superseded earlier ones and addressed the specific concerns raised by contractors.