Facts of the Case

The petitioner, Mahendra Oram, a works contractor, was awarded a contract for improvement of roads and CD works under the Pradhan Mantri Gram Sadak Yojana (PMGSY) in Sundargarh district, Odisha. The contract was executed after the introduction of the Goods and Services Tax (GST) regime, and the work period extended entirely beyond 1 July 2017, when the CGST and OGST Acts came into force.

The petitioner challenged the Finance Department Circular dated 07.12.2017, contending that it compelled contractors to separately reflect GST in their bills, thereby imposing an additional tax burden on contractors. The petitioner sought a declaration that the circular was unconstitutional, ultra vires, and violative of fundamental rights, besides seeking reimbursement of GST along with interest and compensation.

The State opposed the petition by pointing out that the impugned circular had already been replaced by Revised Guidelines dated 10.12.2018, and that similar issues had already been decided by the High Court in earlier judgments.

Issues Involved

  1. Whether the Office Memorandum/Circular dated 07.12.2017 governing GST implementation in works contracts was liable to be declared unconstitutional and ultra vires.
  2. Whether a contractor could seek reimbursement of GST through a writ petition under Article 226 of the Constitution of India.
  3. Whether disputes relating to GST reimbursement and calculation of contractual amounts involve disputed questions of fact suitable for adjudication under writ jurisdiction.
  4. Whether previous judgments upholding the revised GST guidelines governed the present dispute.

Petitioner’s Arguments

The petitioner contended that:

  • The entire contract was executed after the implementation of GST.
  • The Finance Department Memorandum dated 07.12.2017 required contractors to separately show GST in bills for works executed after 01.07.2017.
  • This resulted in an additional financial burden because contractors were required to bear GST that was not contemplated when bids were submitted.
  • The circular infringed the provisions of the GST laws and violated constitutional protections.
  • The petitioner relied upon the earlier decision of the Orissa High Court in Muna Pani vs State of Odisha to support the claim for reimbursement and relief.

Respondent’s Arguments

The State Government argued that:

  • The challenge to the Office Memorandum dated 07.12.2017 had become infructuous since it had already been replaced by the Revised Guidelines dated 10.12.2018.
  • Similar challenges had already been examined in All Orissa Contractors Association, Harish Chandra Majhi, and other cases.
  • The revised guidelines merely prescribed the methodology for implementation of GST during the transition from the VAT regime.
  • The issue regarding reimbursement depended upon factual examination of contract-wise calculations and could not be adjudicated in writ proceedings.

Court Order / Findings

The Orissa High Court dismissed the writ petition and held that:

  • The validity of the earlier Office Memorandum dated 07.12.2017 no longer survived because it had already been replaced by the Revised Guidelines dated 10.12.2018.
  • The legality of the revised guidelines had already been upheld in Harish Chandra Majhi vs State of Odisha, where the Court held that the revised Schedule of Rates merely excluded pre-GST tax components and prescribed the procedure for determining GST liability during the transitional period.
  • GST is payable on works contracts as a composite supply, and revision of the Schedule of Rates was necessary to remove embedded pre-GST taxes before adding GST separately.
  • The petitioner's claim essentially involved reimbursement of money based upon disputed factual calculations regarding GST deductions.
  • Such disputed questions of fact cannot be adjudicated under Article 226.
  • The petitioner was left free to pursue any other remedy available under law before the competent forum.
  • Accordingly, the writ petition was dismissed.

Important Clarification

This judgment reiterates the following legal principles:

  • Challenges to the superseded Office Memorandum dated 07.12.2017 are no longer maintainable after issuance of the revised guidelines.
  • The revised GST guidelines dated 10.12.2018 have already been judicially upheld.
  • Claims relating to GST reimbursement under works contracts generally involve disputed factual issues requiring detailed evidence.
  • Writ jurisdiction under Article 226 is not the appropriate remedy for determining contractual monetary claims involving disputed calculations.
  • Contractors seeking reimbursement must pursue appropriate statutory or civil remedies depending upon the facts of each case.

Sections

  • Article 226 of the Constitution of India
  • Central Goods and Services Tax Act, 2017
  • Odisha Goods and Services Tax Act, 2017
  • Section 61 of the Odisha Goods and Services Tax Act, 2017
  • Finance Department Office Memorandum dated 07.12.2017
  • Finance Department Revised Guidelines dated 10.12.2018

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785561610_2466compressed.pdf  

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