Subash Chandra Mohanty vs. State Of Odisha

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount due to the transition from VAT to GST for works contracts executed after 01.07.2017, where tenders were invited prior to that date. The Court noted the State's submission of revised guidelines dated 10.12.2018, which provided a detailed procedure for calculating the GST-inclusive work value for the balance work. These guidelines stipulated that if the revised GST-inclusive work value for the balance work is more than the original agreement work value for that balance work, the works contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment recovered. The Court directed the petitioner to make a comprehensive representation before 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 10.12.2018, as expeditiously as possible, preferably by 14.02.2020. The Court also stated that if the petitioner is aggrieved by the authority's decision, they are free to challenge it. No coercive action was to be taken against the petitioner until 14.02.2020.

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) on 01.07.2017. The petitioner's grievance was that they were required to pay GST on works contracts entered into before the GST regime, which was not envisaged in the original agreements. The State submitted revised guidelines issued by the Finance Department on 10.12.2018, superseding earlier guidelines from 07.12.2017, to address issues related to works contracts under GST for tenders invited before 01.07.2017 but executed partly or wholly after that date. These guidelines provided a procedure for calculating the GST-inclusive work value for the balance work and for reimbursement or recovery of amounts.

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 before 01.07.2017 but executed thereafter? (Question of law) Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden not contemplated in the original agreements, and therefore, the differential tax amount should be reimbursed. The petitioner relied on the principle that contractual obligations should not be adversely affected by subsequent legislative changes without adequate provision. Revenue's contention: The Additional Government Advocate submitted that the Government had issued revised guidelines on 10.12.2018 to address such grievances. These guidelines provided a mechanism for determining the GST-inclusive work value for the balance work and for reimbursement or recovery of amounts, thereby addressing the petitioner's concern. The State relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated 10.12.2018.