Arunaditya Sahu vs. State Of Orissa

Held

The Court noted that the issue had been decided in several previous cases. The State submitted revised guidelines dated December 10, 2018, which provide a mechanism for calculating the GST-inclusive work value for the balance work executed after July 1, 2017, for contracts tendered before that date. These guidelines stipulate that if the revised GST-inclusive work value is more than the original agreement work value for the 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, ventilating their grievance. The authority is to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, expeditiously, preferably within three months. The petitioner retains the right to challenge the authority's decision if aggrieved. No coercive action is to be taken against the petitioner until March 31, 2020.

Facts

The petitioner, a contractor, challenged 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 argued that they were required to pay GST on works contracts entered into before the GST regime, which was not initially envisaged. The State submitted that revised guidelines were issued by the Government of Odisha, Finance Department, on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines addressed the issue of works contracts executed partly or wholly after July 1, 2017, for tenders invited before that date.

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 prior to July 1, 2017, but executed thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not contemplated when the agreements were finalized, and therefore, they should be reimbursed for this differential tax amount. Revenue's contention: The State contended that revised guidelines were issued on December 10, 2018, which provide a procedure for determining the amount payable to works contractors in such scenarios. These guidelines aim to address the claims of contractors for additional amounts towards GST for works tendered before July 1, 2017, but executed after the GST implementation.