M/S.Krishna Construction vs. Odisha State Police Housing And Welfare Corporation LTD.

Held

The Court noted that the State had issued revised guidelines on December 10, 2018, in supersession of the earlier memorandum dated December 7, 2017. These revised guidelines provide a procedure for determining the GST-inclusive work value for the balance work in cases where tenders were invited before July 1, 2017, but payments are made after the GST implementation. The guidelines stipulate that if the revised GST-inclusive work value for the balance work is more than the original agreement work value for the balance work, the works contractor is to be reimbursed for the excess amount. Conversely, if it is less, the payment is to be reduced, and any excess payment already made is to be recovered. 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, 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.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties (State) in 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 also sought to quash Clause 1(iii) of a Finance Department Memorandum dated December 7, 2017. The grievance was that the introduction of GST resulted in tax liability not originally envisaged in their agreements. The State submitted revised guidelines issued by the Finance Department on December 10, 2018, superseding the earlier memorandum.

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 partly or wholly after that date? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated December 7, 2017, which allegedly caused the grievance, is liable to be quashed? Petitioner's Contention: The petitioner argued that they are required to pay GST on works contracts, a tax not contemplated at the time of entering into the agreements, and therefore, they should be reimbursed for this additional tax burden. Revenue's Contention: The learned Additional Government Advocate submitted that the Government had issued revised guidelines on December 10, 2018, which address the issue of works contracts under GST and supersede the earlier guidelines. The State relied on these revised guidelines.