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2023 (7) TMI 1292 - HC - GSTWithholding of GST amount - impact while paying bills from the month of September, 2019 - liability to pay GST shall be that of the Respondents in terms of the amended work order or not - reimbursement of GST - case of the petitioner is that there was no confusion till the letter of award was issued, inasmuch as, the Letter of Award was issued pre-enactment of GST - violation of principles of promissory estoppel - HELD THAT - After analysing different clauses of tender agreement especially original Clause 10.7 of NIT and the subsequent amendment and also the pre-bid clarification dated 06.09.2016; it appears that as per the agreed terms of the contract, the respondent No. 2 is legally bound to pay/reimburse the impact of GST on all affected transactions under the contract in totality for equitable adjustment in the contact price. The words impact of GST on affected transactions under the contract in totality read in its ordinary natural sense would include all affected transactions in totality under the contract, going by the plain words. The intentions of the parties to reimburse/pay and receive the impact of GST on direct transactions and also indirect transactions (bought out items) is clear from the deletion of portions from Clause 10.7 of GCC which restricted reimbursement of GST only to direct transactions. After deletion of the said portion, the word affected transactions and in totality and equitable adjustment has to be interpreted in the context of amended Clause 10.7. It is evident that the portions of the original Clause 10.7 which carved out an exception to indirect transactions (bought out items) for non-reimbursement of GST, is deleted and is no more part of the agreed terms of the contract. The Clause 31 of the GCC cannot be read in such a manner to bring back what is deleted by the parties as per agreed terms and do violence with amended Clause 10.7, Pre-bid clarification and Clause 28 of LOA. The Clause 31 of the GCC has be to be read in the context of amended Clause 10.7 Pre-bid clarification and Clause 28 of LOA and in light of clear intention of the parties to delete the portion which barred reimbursement impact of GST on indirect transactions. It is further apparent that the contract in the instant case is supply contract, are for sale of goods, hence, in any case, in terms of Section 64 A of the Sale of Goods Act, 1930 the petitioner is entitled to GST impact on the indirect transactions - the actions of the respondent No. 2 violates principles of promissory estoppels and contrary to the doctrine of legitimate expectations of the petitioner and hence, offends Article 14 of the Constitution of India. The petitioners having shifted their position in view of the pre-bid meeting and clarification, now at this stage, the licensee cannot take a U-Turn by not paying the GST impact. The contention of the Respondent No. 2 that the GST was reimbursed as indirect transaction provisionally is extraneous and does not bear out from the agreed terms but the Respondent No. 2 remained silent - In the case of MAHABIR AUTO STORES VERSUS INDIAN OIL CORPN. 1990 (3) TMI 346 - SUPREME COURT it is held by the Hon ble Apex Court that State or its instruments entering any commercial transaction under Article 298 of the Constitution of India, are State under Article 12 and its actions must be reasonable, fair and just even when no formal contract has been entered into between the parties and it should inform and take into confidence the affected party when any adverse action is contemplated - Similar view was taken in the case of SECURITY PRINTING MINTING CORPN. OF INDIA LTD. VERSUS GANDHI INDUSTRIAL CORPORATION 2007 (10) TMI 9 - SUPREME COURT wherein it is held by the Hon ble Supreme Court that principles of sub-silentio not applicable when terms and condition are well known and clearly understood between parties. In the instant case there is no ambiguity or conflict between the contract documents, hence, the order of precedence under Article 1.2 would not apply. The Respondent No. 2 under Para 10(i) of the Counter Affidavit has accepted that stipulations/documents do not reveal any sort of contradiction amongst them. In fact, both the clauses are seen supporting and complementing each other, which have been just re-iterated in the REC'S Letter dated 30-06-2016. With regard to the contention of the Respondents on the question of maintainability; now it is well settled that the writ in contractual matters against public authority or instrumentality or agencies of state are State within the meaning of Article-12 of the Constitution of India and hence are maintainable. Now the law is no more res integra, even in contractual matters the writs would maintainable against the Government or instrumentality or agencies of the Government. Even in cases of money claim writ against State within the meaning of Article 12 of the Constitution of India would be maintainable. In the case at hand, the acts and actions of the Respondents are in derogation to the Article 14, 19(1)(g), 21 and 300A of the Constitution of India. The respondents were not justified in withholding the amount of GST impact and the same is arbitrary, violative and against their own terms of agreement - in view of introduction of GST during the continuance of the ongoing contract, the liability to pay GST shall be that of the Respondent JBVNL in terms of the amended work order incorporating the impact of GST - the matter is remitted back to the Respondent JBVNL to calculate and pay the withheld amount which has been deducted from various bills of the petitioner since September, 2019 till the date of actual payment as the petitioner is entitled for reimbursement of GST along with statutory interest in terms of the GST Act, 2017 read with the Rules framed thereunder. Application disposed off.
Issues Involved:
1. Withholding of GST impact by the Respondent. 2. Reimbursement of GST due to the introduction of GST during the ongoing contract. 3. Entitlement of the Petitioner to GST impact along with interest. 4. Maintainability of writ in contractual matters against public authority. Summary: Issue 1: Withholding of GST Impact by the Respondent The petitioner sought a declaration that the action of the Respondent in withholding the GST impact from bills since September 2019 was arbitrary, violative of the doctrine of promissory estoppel, and contrary to Article 14 of the Constitution of India. The court noted that the contract, including the pre-bid clarifications, clearly indicated that the Respondent was obligated to pay the GST impact on all "affected transactions" under the contract "in totality" for "equitable adjustment" in the contract price. Issue 2: Reimbursement of GST Due to Introduction of GST During the Ongoing Contract The petitioner argued that the introduction of GST during the contract's performance necessitated the Respondent to bear the GST liability as per the amended work order and bid documents. The court observed that the contract's terms, including the amended Clause 10.7, mandated the Respondent to reimburse the GST impact on both direct and indirect transactions. The court rejected the Respondent's interpretation that GST impact on indirect transactions (bought out items) was not reimbursable. Issue 3: Entitlement of the Petitioner to GST Impact Along with Interest The petitioner claimed entitlement to the GST impact along with interest from September 2019 onwards. The court held that the Respondent's action of stopping the payment of GST impact and recovering the same from the petitioner's bills was arbitrary and against the agreed terms. The court directed the Respondent to calculate and pay the withheld GST amount along with statutory interest as per the GST Act, 2017. Issue 4: Maintainability of Writ in Contractual Matters Against Public Authority The Respondent contended that the writ petition was not maintainable in contractual matters. The court, citing various precedents, held that writs are maintainable against public authorities or instrumentalities of the state in contractual matters, especially when the actions are arbitrary and violative of Article 14 of the Constitution of India. The court emphasized that the state and its instrumentalities must act fairly, justly, and reasonably in all their actions, including contractual obligations. Conclusion: The court concluded that the Respondent's withholding of the GST impact was unjustified and arbitrary. It directed the Respondent to calculate and pay the withheld GST amount along with statutory interest within 12 weeks. The writ applications were disposed of accordingly.
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