Subash Chandra Mohanty vs. State Of Odisha

Held

The Court noted that the State Government had issued revised guidelines on 10.12.2018 concerning works contracts under GST, superseding the earlier guidelines. These revised guidelines provide a detailed procedure for determining the GST-inclusive work value for the balance work executed after 30.06.2017, based on tenders invited before 01.07.2017. The procedure involves ascertaining the balance work quantity and its value as per the original agreement (pre-revised SoR-2014), determining the revised estimated work value as per the Revised SoR-2014, adjusting for tender premium/discount, and then adding the applicable GST rate. Crucially, if the revised GST-inclusive work value for the balance work is found to be more than the original agreement work value for that 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, which the authority must consider and dispose of in light of the revised guidelines dated 10.12.2018, preferably by 14.02.2020. No coercive action was to be taken against the petitioner until that date.

Facts

The petitioner, a works contractor, filed a writ petition challenging the State's action in not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) on 01.07.2017. The petitioner's grievance was that GST was payable on works contracts that were tendered before the GST regime but executed partly or wholly after its implementation, an expense not originally envisaged in the agreements. The State submitted revised guidelines issued by the Finance Department on 10.12.2018, which superseded earlier guidelines dated 07.12.2017, to address such issues.

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 tendered before 01.07.2017 but executed partly or wholly after 01.07.2017? The petitioner argued that the introduction of GST resulted in an additional tax liability that was not contemplated when the agreements were entered into, leading to a claim for reimbursement of this differential tax amount. The revenue, through the Additional Government Advocate, submitted that revised guidelines were issued by the Government of Odisha, Finance Department, on 10.12.2018, which provided a procedure for determining the amount payable to works contractors in such scenarios. These guidelines aimed to address the claims of contractors for additional amounts towards GST.