2019 (4) TMI 1568 - HC - GST

Reimbursement of differential tax amount arising out of change in tax regime - transition from VAT to GST regime - HELD THAT - 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 10.12.2018 issued by the Finance Department, Government of Odisha, as expeditiously as possible, preferably by 15.07.2019 - petition disposed off.

Summary

Issues involved:
Challenge to non-reimbursement of differential tax amount due to change from VAT to GST in works contract.

Analysis:
The main issue in this judgment revolves around the challenge to 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 Service Tax (GST) in works contracts. The petitioner's grievance is that the introduction of GST required them to pay taxes that were not initially anticipated when entering into the agreement. The Additional Counter Affidavit of O.P. No.2 submitted revised guidelines issued by the Government of Odisha regarding works contracts under GST. These guidelines provide detailed instructions on how to calculate and reimburse the differential tax amount in works contracts executed before and after the implementation of GST, ensuring fair treatment to contractors affected by the tax regime change.

The revised guidelines issued by the Government of Odisha emphasize the treatment of works contracts as composite supplies of services under GST, taxable at different rates depending on the nature of the contract. The guidelines specify the exclusion of taxes like Excise Duty, VAT, Entry Tax, and Service Tax from the revised Schedule of Rates (SoR-2014) to calculate the GST-exclusive work value. Contractors are required to raise tax invoices separately showing the taxable work value and GST components. The guidelines outline a detailed procedure for determining the amount payable to contractors for works tendered before GST implementation but executed afterward, ensuring a fair calculation of the revised GST-inclusive work value and reimbursement or reduction of payment based on the original agreement value.

The judgment directs the petitioner to submit a comprehensive representation before the appropriate authority within a specified timeline, following which the authority will consider and dispose of the grievance in line with the revised guidelines. The judgment ensures that no coercive action will be taken against the petitioner pending the resolution of their representation. If aggrieved by the authority's decision, the petitioner retains the right to challenge it. The writ petition is disposed of accordingly, and any connected miscellaneous cases or applications are also disposed of in light of this decision.