Narayan Behera vs. State Of Orissa

Held

The Court acknowledged the difficulties faced by contractors due to the shift from VAT to GST, particularly concerning works contracts. It noted the issuance of revised guidelines by the Government of Odisha, Finance Department, on December 10, 2018, which superseded previous guidelines. These revised guidelines established a clear procedure for calculating the GST-inclusive work value for the balance portion of contracts where tenders were invited before July 1, 2017, but execution continued thereafter. The procedure involves determining the balance work's value as per the revised Schedule of Rates (SoR-2014), applying any tender premium/discount, and then adding the applicable GST. Crucially, the guidelines stipulate that if the revised GST-inclusive work value for the balance work is higher than the original agreement value for that balance work, the works contractor is to be reimbursed for the excess amount. The Court directed the petitioner to make a comprehensive representation to the appropriate authority within four weeks, which the authority must consider and dispose of in light of these revised guidelines by January 31, 2020. No coercive action was to be taken against the petitioner until that date.

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 GST liability was not anticipated when the agreement was entered into. The State, through the Additional Government Advocate, presented revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, which superseded earlier guidelines from December 7, 2017. These revised guidelines address the complexities of works contracts under GST for tenders invited 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 arising from the change in tax regime from VAT to GST for works contracts executed partly or wholly after July 1, 2017, when tenders were invited prior to this date. Petitioner's contention: The petitioner argued that the introduction of GST imposed a tax liability that was not envisaged at the time of entering into the agreement, thus causing financial hardship. They sought reimbursement for this additional tax burden. Revenue/State's contention: The State submitted revised guidelines dated December 10, 2018, which provide a procedure for determining the GST-inclusive work value for the balance work executed after July 1, 2017, and stipulate reimbursement if this revised value exceeds the original agreement value. The State relied on these revised guidelines as the basis for resolving such disputes.