Orissa High Court
WP(C)/36453/2020 on 18 January, 2021 W.P.(C) No.36453 of 2020
02. 18.01.2021 Heard Mr. A. Sanganeria, learned counsel for the Petitioner
and Mr. P. K. Muduli, learned Additional Government
Advocate for the State.
2. Mr. P. K. Muduli, learned Additional Government Advocate
for the State accepts notice for Opposite Party Nos.1 to 3.
3. Mr. A. Sanganeria, learned counsel for the Petitioner submits
that the present writ petition being identical to W.P.(C)
No.18868 of 2020, the same may be disposed of in terms of the
order dated 3rd September, 2020, passed in W.P.(C) No.18868
of 2020.
4. Mr. P. K. Muduli, learned Additional Government Advocate
for the State-Opposite Parties does not dispute the said position.
However, he submits that since there is no additional counter
affidavit has been filed in the present writ petition; the same
may not be reflected in Para-7 of the order.
5. By way of this writ petition, 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 1st July, 2017.
6. Batch of writ petitions are being filed on this issue. The main
issue involved in such matters is that the difficulty faced by the
contractors due to change in the regime regarding works
contract under GST. The grievance of the Petitioner is that in
view of the introduction of the GST, Petitioner is required to
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pay tax which was not envisaged while entering into the
agreement.
7. The Government has now come out with a revised guidelines
in this respect in supersession of the guidelines issued vide
Finance Department letter dated 07th December, 2017 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, which
reads as under:
“Sub: Revised guidelines relating to works contract
under GST.
The guidelines regarding works contract
under GST was issued vide Finance Department
letter No. FIN-CTI-TAX-0045-2017-36116/F dated
07.12.2017. Subsequently, the National Rural
Infrastructure Development Agency (NRIDA),
Ministry of Rural Development, Government of India
have issued guidelines for works contract on
implementation of Goods and Services Tax. Several
representations have been received from the
contractors claiming additional amount towards GST
in respect of the works put to tender prior to
01.07.2017 but executed either partly or wholly after
01.07.2017.
On careful consideration of the representation of
the contractors vis-à-vis existing guidelines issued in
the matter, Government have been pleased to issue
following revised guidelines in supersession of the
guidelines issued vide Finance Department letter
dated 07.12.2017.
1. The Goods and Services Tax (GST) has come
into force w.e.f. 1st July, 2017 by subsuming
various indirect taxes such as Excise Duty,
VAT, CST, Entry Tax, Service Tax etc. Works
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contract is treated as composite supply of
service under GST and are taxable @18%,
12% or 5% depending on the nature of works
contract. In order to comply the provisions of
GST relating tow works contract the State
Government have revised the Schedule of Rates
– 2014 (SoR-2014) vide Works Department
OM No. 13827/WD dated 16.09.2017 w.e.f.
01.07.2017. 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 01.07.2017, 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.
3. In case of work, where the tender was invited
before 01.07.2017 on the basis of SoR-2014,
but payments made for balance work or full
work after implementation of GST, the
following procedure shall be followed to
determine the amount payable to the works
contractor;
(i) Item-wise quantity of work done after
30.06.2017 (i.e. the Balance Work) and its
work value as per the original agreement
basing on the pre-revised SoR-2014 is to
be ascertained first.
(ii) The revised estimated work value for the
Balance Work is to be determined as per
the Revised SoR-2014. (In case of rates of
any goods or service used in execution of
the balance Work not covered in the
Revised SoR-2014, the tax-exclusive basic
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value of that goods or service shall be
determined by removing the embedded tax
incidences of VAT, Entry Tax, Excise
Duty, Service Tax, etc. from the estimated
Price/Quoted Price.)
(iii) The revised estimated work value for
the Balance Work shall then be enhanced
or reduced in the same proportion as that
of the tender premium/discount.
(iv) Finally, the applicable GST rate (5%,
12%, or 18% as the case may be ) is to be
added on the revised estimated work value
for the Balance Work to arrive at the
GST-inclusive work value for the Balance
Work.
(v) A model format for calculation of the
GST-inclusive work value for the Balance
Work is attached as Annexure. The
competent authority responsible for
making payment to the works contractor
will determine GST inclusive work value
for the Balance Work for which agreement
executed on the basis of SoR-2014.
(vi) A supplementary agreement shall be
signed with the works contractor for the
revised GST-inclusive work value for the
Balance Work as determined above.
(vii) In case the revised GST-inclusive work
value for the Balance Work is more than
the original agreement work value for the
Balance Work, the works contractor is to
be reimbursed for the excess amount.
(viii) In case the revised GST-inclusive work
value for the Balance Work is less than
the original agreement work value for the
Balance Work, the payment to the works
contractor is to be reduced accordingly.
In case excess payment has already been
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made to the works contractor in
pursuance of the original agreement, the
excess amount paid must be recovered
from the works contractor.
(ix) These procedures shall be applicable
to all works contract including those
executed in EPC/Turn-key/Lumpsum
mode.
4. In case of F2 contracts, the taxable
value under GST for each item of the balance
work is to be determined by the competent
authority applying the premium/discount
offered by the works contractor on respective
item.
The Administrative Departments
should issue suitable instructions to the
Competent Authority responsible for making
payments to the works contractors to
implement this revised guidelines.”
8. In that view of the matter, 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 10th March, 2021.
9. If the Petitioner(s) will be aggrieved by the decision of the
authority, it will be open for the Petitioner(s) to challenge the
same.
10. No coercive action shall be taken against the Petitioner till
10th March, 2021.
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11. The writ petition is disposed of accordingly.
In view of the disposal of the writ petition, Misc. Cases/I.As,
connected to this petition is/are also disposed of.
As the restrictions due to the COVID-19 situation are
continuing, learned counsel for the parties may utilize a soft
copy of this order available in the High Court’s website or print
out thereof at par with certified copy in the manner prescribed,
vide Court’s Notice No.4587, dated 25th March, 2020.
( Dr. S. Muralidhar )
Chief Justice
(S. K. Mishra)
Judge
M. Panda/PA
18th January, 2021
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