Narottam Satapathy vs. The Principal Secretary Finance Dept.

Held

The Court noted that the issue involved had been decided in previous similar cases. The State submitted that revised guidelines dated December 10, 2018, were issued by the Finance Department to address the difficulties faced by contractors due to the change in tax regime for works contracts. These guidelines outline a procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, based on tenders invited prior to that date. If the revised GST-inclusive work value for the balance work is more than the original agreement work value for the balance work, the contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment made is to be recovered. 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, expeditiously, preferably within three months. No coercive action is to be taken against the petitioner until March 31, 2020. The Court expressly left undecided the specific outcome of the petitioner's representation, stating it would be open for the petitioner to challenge the authority's decision if aggrieved.

Facts

The petitioner, a works contractor, challenged the action of the opposite parties (State) for not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) effective from July 1, 2017. The petitioner's grievance was that under the GST regime, they were required to pay tax on works contracts that were tendered before the GST implementation but executed partly or wholly thereafter, a cost not initially envisaged in their agreements. The State submitted that revised guidelines were issued by the Finance Department of the Government of Odisha on December 10, 2018, superseding earlier guidelines, to address such issues.

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 tendered 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 entered into, and therefore, they should be reimbursed for this differential tax amount. Revenue/State's contention: The State contended that revised guidelines were issued by the Finance Department on December 10, 2018, in supersession of previous guidelines, to address the concerns of contractors regarding works contracts under GST. These guidelines provide a procedure for determining the amount payable to works contractors in such scenarios.