Haresh Kumar Agrawal vs. State Of Odisha

Held

The Court noted that the State had issued revised guidelines on 10.12.2018, superseding the earlier memorandum dated 07.12.2017. These revised guidelines provided a comprehensive procedure for determining the GST-inclusive work value for the balance work executed after 30.06.2017, based on revised Schedule of Rates (SoR-2014) and the tender premium/discount. Crucially, Clause 3(vii) of the revised guidelines stipulated 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. The Court directed the petitioner to make a comprehensive representation before the appropriate authority, which would then consider and dispose of the same in light of these revised guidelines expeditiously, preferably by 31.03.2019. The Court also granted liberty to the petitioner to challenge the authority's decision if aggrieved and restrained coercive action until 31.03.2019. The issue of quashing Clause 1(iii) of the earlier memorandum was implicitly addressed by the issuance of superseding revised guidelines.

Facts

The petitioner, a works contractor, filed a writ petition challenging the action of the opposite parties in not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Services Tax (GST) on 01.07.2017. The petitioner also sought to quash Clause 1(iii) of the Finance Department Memorandum dated 07.12.2017. The grievance was that the GST liability was not envisaged when the agreements were entered into. The State submitted revised guidelines issued by the Government of Odisha, Finance Department on 10.12.2018, superseding the earlier memorandum, to address issues related to works contracts under GST for tenders invited before 01.07.2017 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 before 01.07.2017 but executed thereafter? 2. Whether Clause 1(iii) of the Finance Department Memorandum dated 07.12.2017, which allegedly caused the grievance, is liable to be quashed? Petitioner's Contention: The petitioner argued that the introduction of GST resulted in an unforeseen tax liability for works contracts that were agreed upon under the previous tax regime, and thus, they are entitled to reimbursement of this differential tax amount. They also sought to invalidate the impugning clause of the earlier memorandum. Revenue's Contention: The revenue submitted revised guidelines issued on 10.12.2018, which provided a procedure for determining and reimbursing the differential GST amount for works contracts executed after the GST implementation, thereby addressing the petitioner's grievance.