Jitendra Kumar Parida vs. State Of Odisha

Held

The Court held that the petitioner's grievance regarding the differential tax amount due to the transition to GST for works contracts executed after July 1, 2017, on tenders submitted prior to that date, could be addressed under the revised guidelines issued by the Finance Department of Odisha on December 10, 2018. The Court noted that these guidelines provided a specific procedure for determining the GST-inclusive work value for the balance work. If the revised GST-inclusive work value for the balance work exceeded the original agreement work value for that balance work, the works contractor was to be reimbursed for the excess amount. Conversely, if it was less, the payment was to be reduced, and any excess payment already made was to be recovered. The Court directed the petitioner to make a comprehensive representation to the appropriate authority, which was to consider and dispose of the representation in light of the revised guidelines dated December 10, 2018, expeditiously. The Court did not decide the substantive claim but provided a procedural path for its 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 they were required to pay GST on contracts entered into before the GST regime, which was not initially envisaged. 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 July 1, 2017, on contracts tendered before that date. The court directed the petitioner to make a representation based on these revised guidelines.

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 partly or wholly thereafter? The petitioner argued that the introduction of GST necessitated payment of tax that was not contemplated at the time of entering into the agreement, leading to a financial burden. The petitioner relied on the principle that tax liabilities should align with the tax regime in place at the time of contractual agreement or that the benefit of any tax increase should be passed on. The revenue (State) argued that revised guidelines were issued by the Finance Department on December 10, 2018, to address such issues. These guidelines provided a mechanism for calculating the GST-inclusive work value for the balance work and stipulated reimbursement if the revised value exceeded the original agreement value. The revenue relied on these revised guidelines to address the petitioner's grievance.