2022 (11) TMI 1121 - HC - GST

Reimbursement of differential tax amount arising out of change 2 in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 1st July, 2017 - difficulty faced by the contractors due to 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 within a period of three months from the date of receipt of the certified copy of this order. The writ petition is disposed off.

Summary

Issues:
Challenge of action in not reimbursing differential tax amount due to change from VAT to GST in works contract.

Analysis:
The petitioner challenged the Opposite Parties' action of not reimbursing the differential tax amount resulting from the shift in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) effective from 1st July, 2017. The main issue raised was the difficulty faced by contractors due to the change in the regime concerning works contracts under GST. The grievance was that the introduction of GST required the petitioner to pay taxes that were not anticipated at the time of entering into the agreement.

The Government responded by issuing revised guidelines superseding the previous ones, addressing the concerns raised by contractors regarding additional GST amounts for works tendered before 1st July, 2017, but executed after that date. The revised guidelines outlined the treatment of works contracts under GST, the necessity for contractors to raise tax invoices separately showing taxable work value and GST, and the procedures to determine the amount payable to contractors for works done before and after the GST implementation date.

The court directed the petitioner to submit a comprehensive representation to the appropriate authority within four weeks, following which the authority would review and resolve the grievance in line with the revised guidelines issued by the Finance Department. The authority was instructed to handle the matter expeditiously, preferably within three months from receiving the court's order. The petitioner was granted the right to challenge the authority's decision if aggrieved, and no coercive action was permitted against the petitioner until the authority's decision. Ultimately, the writ petition was disposed of accordingly, with an order for the issuance of an urgent certified copy of the judgment.