Subash Chandra Mohanty vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, to address the difficulties faced by works contractors due to the transition to GST. These guidelines provided a specific procedure for determining the GST-inclusive work value for balance work executed after June 30, 2017, for contracts tendered prior to July 1, 2017. The procedure involves ascertaining the balance work done, determining its revised estimated work value as per the revised Schedule of Rates (SoR-2014) excluding embedded taxes, adjusting for tender premium/discount, and then adding the applicable GST rate. Crucially, if the revised GST-inclusive work value for the balance work was found to be more than the original agreement work value for that balance work, the contractor was to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, which the authority was to consider and dispose of in light of the revised guidelines dated December 10, 2018, expeditiously, preferably by February 14, 2020. No coercive action was to be taken against the petitioner until that date. The issue of reimbursement was thus to be resolved by the authority based on the new guidelines.

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) effective July 1, 2017. The petitioner's grievance was that the GST liability was not anticipated when entering into agreements, particularly for works tendered before July 1, 2017, but executed partly or wholly thereafter. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after GST implementation, allowing for reimbursement of excess amounts if the revised value exceeded the original agreement value.

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 contracted prior to July 1, 2017, but executed thereafter, under the provisions of the GST law and relevant government guidelines. Petitioner's contention: The petitioner argued that the introduction of GST imposed a tax liability not envisaged at the time of entering into agreements, leading to a financial burden. They sought reimbursement of this differential tax amount. Revenue's contention: The Additional Government Advocate submitted that revised guidelines were issued by the Government of Odisha, Finance Department, on December 10, 2018, which provided a mechanism for addressing such claims. These guidelines superseded previous ones and outlined a procedure for calculating the GST-inclusive work value for balance work and making appropriate adjustments to payments.