2014 (11) TMI 928 - HC - Service Tax

Clim of reimbursement of service tax from the service recipient of services by the service provider / contractor - Maintainability of petition - Denial of refund claim - whether the petition is maintainable for the purpose of a dispute between the petitioners and the Jabalpur Development Authority in the matter of refund of service tax - Held that - question with regard to entitlement of the petitioners to recover the amount of service tax from the Jabalpur Development Authority either under the common law or under the Resolution No. 12 is a matter which is disputed between the contractor and the Jabalpur Development Authority and it was held that for the said dispute, the matter will have to be decided by a court of competent jurisdiction which can receive evidence, hear the parties and decide the matter in accordance with the terms of the agreement. Once, this court has held that the question of refund of the amount and the tenability of the same based on Resolution No. 12 is to be decided by a court of law after recording of evidence, i.e. after conducting an inquiry, we are of the considered view that this petition is not maintainable. - Decided against assessee.

Summary

Issues:
Challenge to resolution on payment of service tax by contractors to Jabalpur Development Authority.

Detailed Analysis:

Issue 1: Tenability of Resolution on Service Tax Payment
The petitioners, who are contractors, challenged a resolution passed by Jabalpur Development Authority regarding the payment of service tax. The Authority decided to add the service tax component to the cost of construction and recover it from the ultimate beneficiaries of the construction work. A Division Bench of the Court previously held that the contractors are obligated to pay the service tax. The Court stated that any dispute regarding reimbursement should be resolved by a competent court based on the terms of the agreement. The Court refused to interfere in the matter of implementing the resolution.

Issue 2: Withdrawal of Resolution
Subsequently, the petitioners contested the withdrawal of the earlier resolution by the Authority through a new resolution. They argued that the withdrawal was improper and filed a writ petition seeking to quash the new resolution. The Court considered whether the withdrawal of the resolution was valid. The Court noted that the resolution had been withdrawn and emphasized that the dispute between the petitioners and the Authority should be resolved through arbitration or common law remedies.

Issue 3: Maintainability of the Petition
The Court deliberated on the maintainability of the petition concerning the dispute over the refund of service tax between the petitioners and the Authority. It was determined that the dispute falls within the realm of arbitration or common law remedies. The Court granted liberty to the petitioners to pursue remedies available under common law or arbitration if provided in the agreement. The Court directed that any dispute should be independently adjudicated without being influenced by previous court orders.

Conclusion
The Court disposed of all writ petitions, allowing the petitioners to seek remedies through arbitration or common law. The Court emphasized that any disputes should be resolved independently, without being influenced by previous court orders. The petitioners were granted liberty to challenge the new resolution and enforce the earlier resolution through the appropriate legal channels.