Santosh Kumar Mallik vs. State Of Odisha

Held

The Court did not decide the issue of entitlement to reimbursement directly but disposed of the writ petition by directing the petitioner to make a comprehensive representation to the appropriate authority within four weeks. The authority was instructed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by February 20, 2020. The Court 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 expressly leave any issue undecided, but the ultimate resolution of the petitioner's claim was deferred to the administrative authority's decision.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State authorities) 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 at the time of agreement. The State Government had issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address such issues concerning works contracts executed partly or wholly after July 1, 2017, for tenders invited prior to that date.

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 thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden not envisaged in the original agreements, and therefore, they should be compensated for this differential tax amount. They relied on the fact that the original rates in the Schedule of Rates – 2014 (SoR-2014) were inclusive of all taxes, including VAT, while the revised SoR-2014 excluded GST, necessitating additional payment. Revenue's contention: The revenue, through the Additional Government Advocate, submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018. These guidelines provided a procedure for determining the GST-inclusive work value for the balance work and stipulated reimbursement if the revised value exceeded the original agreement value.