Page 55 - GSTL_2nd April 2020_Vol 35_Part 1

2020 ] NEWS DESK J21
GST on works contract : Orissa HC directs Government to
issue instructions for reimbursement of differential tax
amount
A two-judge Bench of the Orissa High Court, last week has directed the
Government Administrative Departments to provide instructions for the reim-
bursement of differential tax amounts arising out of change in tax regime from
Value Added Tax (VAT) to Goods and Services Tax in connection with the works
contracts.
Before the Court, the petitioner challenged the action of the opposite par-
ties in not reimbursing the differential tax amount arising out of change in tax
regime from Value Added Tax (VAT) to Goods and Services Tax. They claimed
that in view of the introduction of the GST, they required to pay tax which was
not envisaged while entering into the agreement.
The Counsel appeared for the Department relied on the revised guide-
lines issued by the Government respect in supersession of the guidelines issued
vide Finance Department letter dated 7-12-2017. He has filed an Additional
Counter Affidavit of O.P. No. 2 in similar cases annexing the revised guidelines
relating to works contract under GST issued by the Government of Odisha. Such
guidelines include the following;
• Item-wise quantity of work done after 30-6-2017 (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.
• The revised estimated work value for the Balance Work is to be de-
termined as per the Revised SoR-2014. (In case of rates of any goods
or services used in the execution of the balance work not covered in
the Revised SoR-2014, the tax-exclusive basic value of that goods or
services shall be determined by removing the embedded tax inci-
dences of VAT, Entry Tax, Excise Duty, Service Tax, etc. from the es-
timated Price/Quoted Price.)
• 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.
• 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 Bal-
ance Work to arrive at the GST-inclusive work value for the Balance
Work.
• 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 de-
termine GST inclusive work value for the Balance Work for which
agreement executed on the basis of SoR-2014.
• A supplementary agreement shall be signed with the works contrac-
tor for the revised GST inclusive work value for the Balance Work
as determined above.
• 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 reimbursement for the excess
amount.
GST LAW TIMES  2nd April 2020  119