2019 (9) TMI 829 - HC - Indian Laws

Recovery of service tax paid - whether the DDA would be liable to reimburse service tax deposited by the Plaintiff with the Government? - HELD THAT - This Court, after seeing the impugned order and the chart is convinced that nothing new is being claimed in the present suit by the addition of the CENVAT credit amount. If the Plaintiff has, in fact, made payments, towards CENVAT credit, which would have to be proved by the Plaintiff in accordance with law, the addition of the same would not create a new cause of action. Insofar as the objection of limitation and Order II Rule 2 CPC is concerned, the ld. Trial Court has held that there is no new cause of action which has been pleaded and has now become time barred. The question of limitation is a mixed question of fact and law which requires to be adjudicated at the final stage. The CENVAT credit would form an integral component of the service tax amount which the Plaintiff could claim recovery of, subject to the objections of the DDA being adjudicated by the Court - the application under Order VI Rule 17 CPC has being rightly allowed.

Summary

Issues:
Challenge to the order allowing amendment under Order VI Rule 17 CPC for claiming CENVAT credit amount.

Analysis:
The judgment involves a challenge to an order dated 2nd May, 2018, allowing the Plaintiff's application under Order VI Rule 17 CPC to amend the plaint to claim the CENVAT credit amount. The background of the case includes a construction contract awarded to the Plaintiff by the Delhi Development Authority (DDA) for outstanding work in the Commonwealth Games, leading to disputes regarding service tax reimbursement. The Plaintiff sought recovery of the service tax component, realizing during the suit that the CENVAT credit amount was inadvertently omitted from the prayer. The Defendant, DDA, opposed the amendment on grounds of limitation, ongoing trial, and Order II Rule 2 CPC.

The Defendant argued that the claim for the additional amount was time-barred, trial had commenced, and the amendment would violate Order II Rule 2 CPC. The Plaintiff contended that CENVAT credit is akin to service tax, the claim already existed, and correction of computational errors was permissible. The Court examined the plaint and annexed chart, noting the separate column for CENVAT credit not included in the final relief claimed for service tax.

The Trial Court allowed the amendment, determining that the basic nature of the case remained unchanged, and computational errors were not barred by limitation or Order II Rule 2 CPC. The High Court concurred, stating that the addition of CENVAT credit did not introduce a new cause of action and did not affect limitation. The Court emphasized that the Defendant could raise objections during adjudication. The costs were increased to ?10,000 per suit due to the Plaintiff's awareness of the claim omission.

The High Court did not express a view on whether the CENVAT credit formed part of the service tax. The Defendant was permitted to raise additional issues framed due to the amendment, including limitation concerning the CENVAT credit component. The petition and pending applications were disposed of, affirming the Trial Court's decision to allow the amendment under Order VI Rule 17 CPC.