M/S Surender Singh Kabli vs. State Of Orissa

Held

The Court noted that the State Government had issued revised guidelines on December 10, 2018, to address the issue of differential tax amounts for works contracts executed during the transition from VAT to GST. These guidelines provide a specific procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017. If the revised GST-inclusive work value is higher than the original agreement work value for the balance work, the works 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, as expeditiously as possible, preferably by January 31, 2020. The Court also stated that if the petitioner is aggrieved by the authority's decision, they are free 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 the introduction of GST meant they had to pay taxes not originally envisaged in their agreements. The State's Finance Department had 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 amount payable to contractors for works tendered before July 1, 2017, but executed partly or wholly after that date.

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 before July 1, 2017, but executed thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an increased tax burden that was not contemplated at the time of entering into the agreements. They sought reimbursement of this differential tax amount. Revenue/State's contention: The State submitted revised guidelines issued by the Finance Department on December 10, 2018, which provided a framework for calculating and reimbursing differential tax amounts for works contracts executed across the VAT-GST transition. The State relied on these revised guidelines to address the petitioner's grievance.