M/S.Shiva Jyoti Construction 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 detailed procedure for determining the GST-inclusive work value for the balance work executed after 30.06.2017, for contracts tendered before 01.07.2017. The procedure involved ascertaining the work done after 30.06.2017, determining its value as per the revised Schedule of Rates (SoR-2014) excluding GST, applying any tender premium/discount, and then adding the applicable GST rate. If the revised GST-inclusive work value for the balance work was more than the original agreement work value for that balance work, the contractor was to be reimbursed for the excess amount. Conversely, if it was less, the payment would be reduced, and any excess payment recovered. The Court directed the petitioner to make a comprehensive representation before the appropriate authority within four weeks, ventilating their grievance. The authority was directed to consider and dispose of this representation in light of the revised guidelines dated 10.12.2018, as expeditiously as possible, preferably by 31.03.2019. The petitioner was granted liberty to challenge the authority's decision if aggrieved. No coercive action was to be taken against the petitioner until 31.03.2019.

Facts

The petitioner, a works contractor, challenged the action of the opposite parties (State authorities) 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 a Finance Department Memorandum dated 07.12.2017. The core grievance was that the GST liability was not envisaged when agreements were entered into, leading to financial hardship. The State submitted revised guidelines issued on 10.12.2018, superseding the earlier memorandum, which provided a procedure for calculating and reimbursing the differential GST amount for works executed partly or wholly after 01.07.2017, for tenders invited prior to 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 tendered before 01.07.2017 but executed partly or wholly after that date, considering the introduction of GST and its impact on works contracts. Petitioner's contention: The petitioner argued that the introduction of GST imposed a tax liability that was not contemplated at the time of entering into agreements based on the pre-GST tax regime (VAT, Excise Duty, Service Tax, etc.). This resulted in an increased cost for executing the balance work, for which reimbursement was sought. Revenue's contention: The Revenue (State) submitted that revised guidelines were issued on 10.12.2018, superseding the earlier memorandum dated 07.12.2017. These revised guidelines provided a mechanism for determining and reimbursing the differential GST amount payable to works contractors for work executed after the GST implementation, based on tenders invited prior to 01.07.2017.