Gyana Ranjan Moharatha vs. The Principal Secretary Finance Dept

Held

The Court acknowledged the issue faced by contractors due to the change in tax regime and the subsequent issuance of revised guidelines by the Government of Odisha, Finance Department, on December 10, 2018. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, detailing their grievance. The authority is mandated to consider and dispose of this representation in light of the aforesaid 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 at liberty to challenge it. No coercive action was to be taken against the petitioner until January 31, 2020. The Court did not decide the substantive claim for reimbursement but provided a procedural path for its resolution.

Facts

The petitioner, a works contractor, filed a writ petition challenging the opposite parties' 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 Government, in response to such issues faced by contractors, issued revised guidelines on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines provided a procedure for determining the amount payable to works contractors for balance work executed after July 1, 2017, on tenders invited before 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, where tenders were invited prior to this date. Petitioner's contention: The petitioner argued that they are required to pay GST on works executed after July 1, 2017, for contracts entered into before the GST regime, which was not contemplated in the original agreement. They sought reimbursement for this additional tax burden. Revenue/State's contention: The State Government, through the Finance Department, issued revised guidelines on December 10, 2018, providing a framework for calculating the GST-inclusive work value for balance work. This procedure aimed to address the claims of contractors for additional amounts towards GST. The revised guidelines outlined a method for determining the revised estimated work value for the balance work and adding the applicable GST rate, leading to a supplementary agreement and potential reimbursement or recovery.