2020 (1) TMI 1163 - HC - GST

Reimbursement of differential tax amount - change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from 01.07.2017 - grievance of the petitioner is that in view of the introduction of the GST, petitioner is required to pay tax which was not envisaged while entering into the agreement - 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 29.02.2020. 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 petitioner challenged the opposite parties for not reimbursing the differential tax amount arising from the change in tax regime from VAT to GST. The main issue revolved around the difficulties faced by contractors due to the change in the regime regarding works contract under GST. The petitioner's grievance was that the introduction of GST necessitated the payment of taxes that were not initially considered while entering into the agreement.

The Government issued revised guidelines superseding the previous guidelines related to works contract under GST. The revised guidelines clarified the treatment of works contract as a composite supply of service under GST, taxable at different rates. It specified the exclusion of various taxes like Excise Duty, VAT, Entry Tax, and Service Tax from the revised Schedule of Rates, necessitating the determination of GST-exclusive work value for estimating and adding GST at the appropriate rate.

For works contracts where tenders were invited before GST implementation but executed after, a procedure was outlined to determine the revised estimated work value for the balance work. This involved ascertaining the work value based on the original agreement, adjusting it as per the revised Schedule of Rates, and adding the applicable GST rate to arrive at the GST-inclusive work value. The guidelines also included provisions for supplementary agreements based on the revised values and reimbursement or reduction of payments accordingly.

The judgment directed the petitioner to submit a comprehensive representation to the appropriate authority within a specified timeframe, following which the authority would consider and dispose of the grievance in line with the revised guidelines. The petitioner was granted the option to challenge the authority's decision if aggrieved, with a stay on coercive actions until a specified date. The writ petition was disposed of accordingly, with any connected miscellaneous cases also being resolved.