Subash Chandra Mohanty vs. State Of Odisha

Held

The Court noted that the State Government has issued revised guidelines on December 10, 2018, to address the issue of works contracts entered into before July 1, 2017, but executed thereafter. These guidelines provide a detailed procedure for calculating the GST-inclusive work value for the balance work. Specifically, point 3(vii) of the revised guidelines states that if the revised GST-inclusive work value for the balance work is more than the original agreement work value for the balance work, the works contractor is to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority is to consider and dispose of this representation in light of the aforesaid revised guidelines dated December 10, 2018, expeditiously, preferably by February 29, 2020. The Court also stated that if the petitioner is aggrieved by the authority's decision, they can challenge it. No coercive action is to be taken against the petitioner until February 29, 2020. The writ petition was disposed of accordingly.

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 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 originally envisaged. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines addressed the issue of works contracts tendered before July 1, 2017, but executed partly or wholly after 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? The petitioner argued that they are facing difficulties due to the change in tax regime and are required to pay GST on contracts where it was not initially contemplated. They seek reimbursement for this additional tax burden. The revenue, through the Additional Government Advocate, submitted that revised guidelines have been issued by the Government of Odisha, Finance Department, vide Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated December 10, 2018. These guidelines provide a procedure for determining the GST-inclusive work value for the balance work executed after GST implementation and stipulate reimbursement if the revised value exceeds the original agreement value.