2022 (11) TMI 787 - HC - GST

Reimbursement of differential tax amount arising out of 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 Government has now come out with a revised guidelines in this respect in supersession of the guidelines issued vide Finance Department letter dated 07.12.2017. He has filed Additional Counter Affidavit of O.P.-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-CTITAX-0045-2017/38535/F Dated 10.12.2018 - In that view of the matter, petitioner shall make a comprehensive representation before the appropriate authority within two 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 02.01.2023. The writ petition is disposed of.

Summary

Issues:
Challenge to non-reimbursement of differential tax amount post transition from VAT to GST in works contract under GST regime.

Analysis:
The petitioner challenged the Opposite Parties' action of not reimbursing the differential tax amount resulting from the transition from Value Added Tax (VAT) to Goods and Service Tax (GST) effective from 01.07.2017. The main issue revolved around the difficulty faced by contractors due to the change in the regime concerning works contracts under GST. The petitioner contended that the introduction of GST required them to pay taxes that were not anticipated during the agreement's inception. The Government issued revised guidelines superseding the earlier guidelines to address the concerns raised by contractors regarding additional GST amounts in works contracts tendered before 01.07.2017 but executed after that date. The revised guidelines outlined the treatment of works contracts under GST, emphasizing the exclusion of taxes like Excise Duty, VAT, Entry Tax, and Service Tax from the revised Schedule of Rates. Contractors were required to raise Tax Invoices separately showing the taxable work value and GST components. For works where tenders were invited pre-GST but executed post-GST, specific procedures were outlined to determine the payable amount to the works contractor, considering revised estimated work values and applicable GST rates.

The Court directed the petitioner to submit a comprehensive representation to the appropriate authority within two weeks, highlighting their grievances in line with the revised guidelines issued by the Finance Department of Odisha. The authority was instructed to consider and dispose of the representation promptly, preferably by 02.01.2023. The petitioner was granted the right to challenge the authority's decision if aggrieved. Consequently, the writ petition was disposed of based on the above directives, providing a framework for addressing the challenges faced by contractors in works contracts post the transition to the GST regime.