In W.P.(C) No.32342 of 2022-ORI HC- Orissa HC comes to aid of contractor facing difficulty due to change in regime under GST, directs Authorities to refer to State’s 2018 Notification mentioning that works contractor has to raise Tax Invoice showing taxable work value as well as GST (CGST & SGST) separately
Justices S. Muralidhar & M. S. Raman [18-01-2023]


Read Order: Sabita Choudhury Vs. State Of Odisha And Others


LE Correspondent


Bhubaneshwar, February 2, 2023: While considering the difficulty faced by the contractors due to change in the regime regarding works contract under GST, the Orissa High Court has directed the Authorities to refer to the State’s revised guidelines relating to works contract under GST issued by the Government of Odisha, Finance Department dated December 10, 2018 while considering petitioner’s plea.


By way of this writ petition, before the Division Bench of Justice S. Muralidhar and Justice M. S. Raman, the Petitioner has challenged the action of the Opposite Parties in not reimbursing the differential tax amount arising out of change in tax regime from Value Added Tax (VAT) to Goods and Service Tax (GST) with effect from July 1, 2017.


The 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.


The Bench noticed that the Government had come out with revised guidelines in this respect in supersession of the guidelines issued by a Finance Department letter dated December 7, 2017. 


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 December 10, 2018, wherein it was stated that in order to comply the provisions of GST relating to works contract the State Government had revised the Schedule of Rates – 2014 (SoR-2014). 


While the item rates in the SOR-2014 were inclusive of all taxes i.e. Excise Duty, VAT, Entry Tax, Service Tax etc., the same has been excluded in the Revised SoR-2014. Therefore, while preparing estimates for a work after July 1, 2017, the GST exclusive work value is to be arrived at as per the revised SoR-2014 and then GST will be added at the appropriate rate.


“2. In GST regime, the works contractor is required to raise Tax Invoice clearly showing the taxable work value and GST (CGST+SGST) separately,” the Guidelines further enumerated while also putting forth the procedure to be followed to determine payments made for balance work or full work after implementation of GST, in case of work, where the tender was invited before July 1,2017 on the basis of SoR-2014.


Keeping such aspects into consideration, the Bench held that the Petitioner shall make a comprehensive representation before the appropriate authority within four weeks from 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 December 10, 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 Bench held while disposing of the petition while also directing no coercive action to be taken against the Petitioner till a decision by the authority is taken.


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