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2021 (1) TMI 1264 - HC - GSTReimbursement of differential tax amount arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) - requirement to pay tax which was not envisaged while entering into the agreement - change in the regime regarding works contract under GST - HELD THAT - The Government has now come out with a revised guidelines in this respect in supersession of the guidelines issued vide Finance Department letter dated 7th December, 2017. He has filed Additional Counter Affidavit of Opposite Party-authority in similar cases annexing the revised guidelines relating to works contract under GST issued by the Government of Odisha, Finance Department vide Office memorandum No. FIN-CTI-TAX-0045-2017/38535/F Dated 10th December, 2018. The Petitioner shall make a comprehensive representation before the appropriate authority within four weeks from today ventilating the grievance. If such a representation is filed, the authority will consider and dispose of the same, in the light of the aforesaid revised guidelines dated 10th December, 2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 19th March, 2021. Petition disposed off.
Issues:
Challenge to non-reimbursement of differential tax amount post transition from VAT to GST in works contract. Analysis: The petitioner challenged the action of the Opposite Parties for not reimbursing the differential tax amount arising from the transition from Value Added Tax (VAT) to Goods and Service Tax (GST) effective from July 1, 2017. The main issue highlighted was the difficulty faced by contractors due to the change in the tax regime under GST concerning works contracts. The grievance was that due to the introduction of GST, the petitioner had to pay taxes that were not anticipated at the time of entering into the agreement. The Government issued revised guidelines superseding the previous guidelines regarding works contracts under GST. The guidelines clarified that works contracts are treated as a composite supply of service under GST and are taxable at different rates depending on the nature of the contract. The revised guidelines also provided a detailed procedure for determining the amount payable to works contractors in cases where tenders were invited before July 1, 2017, but payments were made post-GST implementation. The guidelines emphasized the need for a supplementary agreement to be signed for the revised GST-inclusive work value, with provisions for reimbursement or reduction in payment based on the revised value. The court directed the petitioner to submit a comprehensive representation before the appropriate authority within four weeks, following which the authority would consider and dispose of the grievance in line with the revised guidelines issued by the Finance Department. The petitioner was given the option to challenge the authority's decision if aggrieved. Additionally, the court ordered that no coercive action should be taken against the petitioner until a specified date. Finally, the writ petition was disposed of accordingly, with instructions for parties to access the order digitally due to COVID-19 restrictions.
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