Subash Chandra Mohanty vs. State Of Odisha

Held

The Court held that the revised guidelines issued by the Finance Department, Government of Odisha, on December 10, 2018, provide a framework for addressing the petitioner's grievance. The Court noted that these guidelines supersede the earlier ones and offer a mechanism to determine the GST-inclusive work value for balance work executed after the GST implementation, where tenders were invited prior to July 1, 2017. Specifically, the guidelines outline a procedure for ascertaining the work done after June 30, 2017, determining its revised work value as per the revised SoR-2014, adjusting it by the tender premium/discount, and then adding the applicable GST. If this revised GST-inclusive work value for the balance work is more than the original agreement work value for that balance work, the 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 December 10, 2018, expeditiously, preferably by February 14, 2020. The Court also granted liberty to the petitioner to challenge the authority's decision if aggrieved and restrained coercive action until February 14, 2020.

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 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 The State submitted revised guidelines issued by the Finance Department on December 10, 2018, which superseded earlier guidelines dated December 7, 2017. These revised guidelines provided a procedure for calculating the GST-inclusive work value for balance work executed after July 1, 2017, where tenders were invited before that date 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 entered into prior to July 1, 2017, but executed partly or wholly thereafter? 2. Whether the revised guidelines issued by the Government of Odisha on December 10, 2018, provide an adequate mechanism for addressing the petitioner's grievance regarding the differential tax amount? Petitioner's Contentions: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not envisaged when the agreements were entered into, leading to a claim for reimbursement of the differential tax amount. The petitioner relied on the principle that contractual obligations should not be adversely affected by subsequent legislative changes without adequate compensation. Revenue's Contentions: The Revenue submitted that the Government had issued revised guidelines on December 10, 2018, to address the issues faced by contractors due to the GST implementation. These guidelines provided a specific procedure for calculating the GST-inclusive work value for balance work and stipulated reimbursement if the revised value exceeded the original agreement value. The Revenue contended that the petitioner should follow this prescribed procedure.