Gajendra Prasad Panda vs. State Of Orissa

Held

The Court acknowledged the issue faced by contractors due to the change in tax regime from VAT to GST, particularly for works contracts tendered before July 1, 2017, but executed thereafter. The Court noted the issuance of revised guidelines by the Government of Odisha, Finance Department, on December 10, 2018, which superseded earlier guidelines. These revised guidelines provided a detailed procedure for determining the GST-inclusive work value for the balance work executed after June 30, 2017. Crucially, the guidelines stipulated that if the revised GST-inclusive work value for the balance work exceeded the original agreement work value, the works contractor was 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 was instructed to consider and dispose of this representation in light of the revised guidelines dated December 10, 2018, as expeditiously as possible, preferably by January 31, 2020. The Court also stated that if the petitioner remained aggrieved by the authority's decision, they would be at liberty to challenge it. No coercive action was to be taken against the petitioner until January 31, 2020.

Facts

The petitioner, a works contractor, filed a writ petition challenging the opposite parties' refusal to reimburse 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 GST was payable on works contracts entered into before the GST regime, which was not initially envisaged. The State Government subsequently issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017, to address difficulties faced by contractors regarding works contracts under GST. These revised guidelines provided a procedure for determining the GST-inclusive work value for balance work executed after July 1, 2017, and stipulated reimbursement for excess amounts.

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 executed partly or wholly after July 1, 2017, based on tenders invited prior to that date? The petitioner argued that due to the introduction of GST, they are required to pay tax that was not contemplated when the agreements were made. They relied on the fact that the original rates in the Schedule of Rates (SoR) 2014 were inclusive of all taxes, but the revised SoR 2014, effective from July 1, 2017, excluded these taxes, necessitating the addition of GST. The petitioner sought a mechanism to recover this additional tax burden. The revenue or State, represented by the learned Additional Government Advocate, submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018. These guidelines provided a procedure for calculating the GST-inclusive work value for balance work and stipulated reimbursement if the revised value exceeded the original agreement value. The State's contention was that these revised guidelines offered a remedy to contractors like the petitioner.