GST Refund for Government Contractor Due to Rate Revision even though the payment system is locked

Summary in Key Points:

Issue: Whether a government contractor is entitled to a refund of the differential amount due to a revision in GST rates, even though the payment system is locked and the contractor did not submit a revised bill.
Facts: The petitioner, a government contractor, completed a project under the PMGSY (Pradhan Mantri Gram Sadak Yojana) scheme. The payment system (OMMS) automatically locked after the final bill was paid. However, there was a revision in GST rates during the project, and the contractor did not submit a revised bill incorporating the new rates. The department prepared a revised bill with the updated rates, which was approved by the higher authority. However, the differential amount could not be paid due to the locked payment system.
Decision: The High Court directed the department to take necessary steps to ensure that the refund of the differential amount is disbursed to the contractor within six weeks.

Decision:

The High Court ruled in favor of the assessee, directing the department to disburse the refund of the differential amount to the contractor within six weeks. The court emphasized the following:

Entitlement to Refund: The contractor is entitled to the differential amount due to the GST rate revision, even though they did not submit a revised bill.
Department’s Responsibility: The department is responsible for ensuring that the contractor receives the correct payment, including any adjustments due to rate revisions.
Time-Bound Disbursement: The court directed the department to take all necessary steps to disburse the refund within six weeks, ensuring prompt payment to the contractor.

Important Note: This case highlights the importance of ensuring that government contractors receive the correct payments, including any adjustments due to changes in GST rates. The High Court’s decision emphasizes the department’s responsibility to take necessary action to rectify any discrepancies and ensure timely disbursement of refunds, even if the contractor did not submit a revised bill. This decision protects the interests of government contractors and promotes fairness and transparency in government contracts.

HIGH COURT OF ORISSA

Prayash Construction

State of Odisha

Arindam Sinha and M.S. Sahoo, JJ.

W.P.(C) No. 21024 of 2024

DECEMBER 5, 2024

S.K. Acharya, Adv. for the Petitioner. S. Swain, AGA and Diganta Das, ASC for the Respondent.

ORDER

1. Mr. Acharya, learned advocate appears on behalf of petitioner and submits, his client is entitled to refund. He submits, counter has been filed and there is no dispute.

2. Mr. Swain, learned advocate, Additional Government Advocate appears on behalf of opposite party no.2, who had awarded the works contract to petitioner. He submits, counter dated 3^rd December, 2024 has been filed. Mr. D. Das, learned advocate, Additional Standing Counsel appears on behalf of opposite party no.4.

3. Reproduced below is paragraph-1 from our order dated 7^th October, 2024.

“1. Mr. Acharya, learned advocate appears on behalf of petitioner and submits, this is his client’s second writ petition. The first was disposed of by coordinate Bench on order dated 15^th November, 2019 directing his client to make comprehensive representation before the appropriate authority in light of latest guideline dated 10^th December, 2018 issued by Finance Department, Govt. of Odisha. He demonstrates from page 156, representation dated 25^th November, 2019 was made by his client. He is to receive refund. Reminders have been given but the authority remains unmoved. Hence, his client is again before Court.”

Also reproduced below are paragraphs 11, 13 to 16 from counter of opposite party no.2.

“11. That after revision of GST rates on work contract, the petitioner (agency) didn’t submit the revised work bill incorporating the Post-GST rates. As all the PMGSY payments are made through Online Management Monitoring and Accounting System (in short OMMS), the payment site automatically locked once the final bill paid. The final bill was paid to the petitioner on 08.12.2018.

Finally, the GST rates on work contract was issued by Finance Department, Govt. of Odisha on 10-12-2018. By that time, the work was physically completed & final bill also paid to petitioner (Agency).

xxx xxx xxx

13. That the Opp. Party No.2 has never denied the petitioner for reimbursement of the differential tax amount under GST regime, rather the petitioner was asked to submit Post GST revised bill for approval from higher authority.

14. That due to non-submission of revised bill after repeated instruction, the Junior Engineer, Sub-Divisional Officer and the then Executive Engineer prepared the revised bill incorporating the Post-GST rates & submitted the same to higher authority (Chief Construction Engineer) for approval. The rates & revised estimate got approved by Chief Construction Engineer, Rural Works Circle, Bhawanipatna vide letter No.346 dtd.23-02-2022. Copy of the letter No.346 dtd.23-02-2022 is annexed herewith as Annexure-A/2.

15. That, the bill was prepared by the Opp. Party. But due lock in On-line Management & Monitoring System (OMMS) payment site the differential rate could not be paid to the petitioner as PMGSY is a Central Govt. scheme, the payment site are managed by National Rural Infrastructure Development Agency, New Delhi. However, it is requested by this deponent to Chief Engineer, PMGSY to take necessary steps to unlock the payment site for early payment to the petitioner. The Letter No.3096 dated 30.11.2024 for unlocking the Online Management, Monitoring and Accounting System (OMMAS) for payment is annexed herewith as Annexure-B/2.

16. That the claimed amount as submitted by the petitioner in Annexure-4 will be paid to him immediately after unlock of Online Management, Monitoring and Accounting System (OMMAS).”

On query Mr. Swain submits, request has already been made, as stated in paragraph-15 of the counter, to the Central authority. He submits, in his estimate six weeks’ will be time required.

4. The refund be made to petitioner, as said it will be in the counter. Opposite party no.2 is do all things required to ensure that the refund is disbursed within six weeks from date. For the purpose opposite party has liberty of producing certified copy of this order to concerned authority.

5. The writ petition is disposed of.