H.L. Infrastructure vs. State Of Odisha

Held

The Court acknowledged the issue faced by contractors due to the change in tax regime. It noted the submission of revised guidelines by the State Government dated December 10, 2018, which provide a mechanism for determining and reimbursing the differential GST amount for works contracts. 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 expeditiously, preferably by March 31, 2019. The Court also stated that if the petitioner is aggrieved by the authority's decision, they can challenge it. No coercive action is to be taken against the petitioner until March 31, 2019. The writ petition was disposed of with these directions.

Facts

The petitioner, a works contractor, challenged 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 works contracts entered into before the GST regime, which was not originally envisaged. The State submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, superseding earlier guidelines from December 7, 2017. These revised guidelines addressed the issue of additional GST claims by 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 arising from the change in tax regime from VAT to GST for works contracts entered into prior to July 1, 2017, but executed thereafter? Petitioner's contention: The petitioner argued that the introduction of GST resulted in an additional tax burden that was not contemplated when the agreements were made, and therefore, they should be reimbursed for this differential tax amount. Revenue's contention: The revenue submitted revised guidelines issued by the Government of Odisha, Finance Department, on December 10, 2018, which provide a procedure for determining and reimbursing additional GST amounts for works contracts executed after the GST implementation date, for tenders invited before that date. The revenue relied on the Office Memorandum No. FIN-CTI-TAX-0045-2017/38535/F dated 10.12.2018.