M/S.P.M. Contractors PVT.LTD vs. The Executive Engineer,Rural Works Division

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount arising from the transition to GST for works contracts. The Court noted that the State had issued revised guidelines on December 10, 2018, to address such issues. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, detailing their grievance. The authority was then directed to consider and dispose of this representation expeditiously, preferably by February 20, 2020, in light of the aforementioned revised guidelines. The Court also stated that if the petitioner remained aggrieved by the authority's decision, they would be at liberty to challenge it. No coercive action was to be taken against the petitioner until February 20, 2020. The Court did not decide the ultimate entitlement to reimbursement but provided a procedural path for resolution.

Facts

The petitioner, a works 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 government subsequently issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address issues related to works contracts under GST for tenders invited before July 1, 2017, but executed partly or wholly after that date. These revised guidelines provided a procedure for determining the GST-inclusive work value for the balance work and stipulated reimbursement for excess amounts.

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 thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not contemplated when the agreements were finalized. They sought reimbursement of this differential tax amount. Revenue/State's contention: The State submitted revised guidelines issued on December 10, 2018, which provided a mechanism for calculating the GST-inclusive work value for the balance work and for reimbursing contractors if the revised value exceeded the original agreement value. The State relied on these revised guidelines as the basis for addressing the petitioner's grievance.