Subash Chandra Mohanty vs. State Of Odisha

Held

The Court acknowledged the petitioner's grievance regarding the differential tax amount arising from the GST regime change. It noted the State's submission of revised guidelines dated December 10, 2018, which provide a framework for calculating the GST-inclusive work value for balance work on contracts tendered before July 1, 2017. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, detailing their grievance. The authority is then mandated to consider and dispose of this representation in light of the aforementioned revised guidelines, preferably by February 14, 2020. The Court also stated that if the petitioner remains aggrieved by the authority's decision, they are at liberty to challenge it. No coercive action was to be taken against the petitioner until February 14, 2020. The Court did not decide the ultimate entitlement to reimbursement but provided a procedural path for resolution.

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 the GST liability was not anticipated when entering into agreements, as the previous tax regime's rates were inclusive of all taxes. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, which superseded earlier guidelines from December 7, 2017.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, where tenders were invited before July 1, 2017, based on the pre-revised Schedule of Rates (SoR-2014).

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 tendered before July 1, 2017, but executed partly or wholly after that date? 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.