2021 (2) TMI 819 - HC - GST

Reimbursement of GST - change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) - 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 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. Additional Counter Affidavit of Opposite Party-authority has been filed 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. In that view of the matter, 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 31st March, 2021 - If the Petitioner will be aggrieved by the decision of the authority, it will be open for him to challenge the same. No coercive action shall be taken against the Petitioner till 31st March, 2021 - The writ petition is 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 respondent's action of not reimbursing the differential tax amount resulting from the transition from Value Added Tax (VAT) to Goods and Service Tax (GST) from 1st July 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 petitioner contended that the introduction of GST required them to pay taxes that were not anticipated at the time of entering into the agreement. The government issued revised guidelines superseding the previous guidelines related to works contracts under GST. These revised guidelines clarified the treatment of works contracts as composite supplies under GST and outlined the taxable 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 GST implementation but payments were made post-GST. The competent authority was tasked with calculating the GST-inclusive work value and signing supplementary agreements with contractors accordingly.

The court directed the petitioner to submit a comprehensive representation to the appropriate authority within four weeks, citing the grievance. The authority was instructed to consider and dispose of the representation in line with the revised guidelines issued by the Finance Department of the Government of Odisha by 31st March 2021. The petitioner was granted the right to challenge the authority's decision if aggrieved. Additionally, the court ordered that no coercive action should be taken against the petitioner until 31st March 2021. Finally, the writ petition was disposed of accordingly, providing a resolution pathway for the petitioner to address the tax reimbursement issue effectively.