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 issue of differential tax amounts for works contracts executed after the GST implementation but tendered before it. These guidelines provide a detailed procedure for calculating the GST-inclusive work value for the balance work, considering the original agreement rates and the revised Schedule of Rates (SoR-2014). The guidelines stipulate that if the revised GST-inclusive work value for the balance work is higher 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 to the appropriate authority within four weeks, ventilating their grievance. The authority is to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by February 14, 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 is to be taken against the petitioner until February 14, 2020. The writ petition was disposed of with these directions.

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 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 in the original agreements. 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, based on tenders invited before July 1, 2017.

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 contracts entered into prior to July 1, 2017, but executed thereafter? The petitioner argued that the introduction of GST resulted in an additional tax burden not envisaged at the time of entering into agreements, leading to a claim for reimbursement of this differential tax amount. The State contended that revised guidelines have been issued to address such situations. The State relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated December 10, 2018, which outlines a procedure for calculating the GST-inclusive work value for balance work and provides for reimbursement if the revised value exceeds the original agreement value.