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TMI Blog2015 (4) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... provision is specifically confined to the payment of tax in respect to any taxable events in relation to goods and not with regard to services. The taxes, in fact, have been specified as duty of Customs or Excise and any tax on the sale or purchase of goods. The service tax evidently is not upon any contract for sale of goods. It is purely leviable on a contract for provision of service. - More over even in Section 64A of the Sale of Goods Act, 1930 liability of benefit of imposition of new tax or increase or decrease in taxes is subject to there being a different intention appearing from the terms of the contract and the same is not absolute. It is only when the contract is silent on the point that the benefit of liability for increase or decrease on the price of goods on account of such taxes will have to go to the respective party. Service tax was not leviable at the relevant time on works contract (when the contract was excuted) but the same would also be deemed to have been included in view of the clear provision that the rate should be inclusive of direct or indirect elements. Thus, the said provision can only be interpreted to mean that any future increase or decrease o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners from time to time from the Board. With effect from 1.6.2007 the service provision part of the work contract became exigible to service tax and pursuant to a notice from the Central Excise and Service Tax Authorities, the petitioners had ultimately to pay the aforesaid amount of service tax. The petitioners approached the respondent-Board for reimbursement of the service tax amount paid which has been refused by letter dated 21.10.2010 of the Additional Chief Engineer (Civil) of the Board stating that in terms of Chapter-X, Instruction to Tenderer Clause 1 of the Contract Agreement, the petitioners were not entitled to any such payment of reimbursement of service tax. Aggrieved by the same the petitioners have filed the present writ application. Learned counsel for the petitioners, in support of his stand, has sought to rely upon a decision of the Allahabad High Court in the case of Bhagwati Security Services (Regd.) Vs. Union of India: (2013) 031 STR 0537 which short judgment is in the following terms: 2. There is an agreement between the petitioner and the respondent no.2 i.e. B.S.N.L., under which the petitioner was required to provide security services to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arity, if any. It is a well-known principle of construction of a contract that if the terms applied by one party are unclear, an interpretation against that party is preferred (verba chartarum fortius accipiuntur contra proferentem). Learned counsel also submits that under Section 64A of the Sale of Goods Act, unless a different intention appears from the terms of the contract, the liability of any new tax or increase or decrease in an existing tax like duty of customs or excise or tax on sale and purchase of goods, the liability or benefit of such increase would fall upon the respective person. It is submitted that in the present matter since the service tax has been imposed from a date subsequent to the contract during the process of the execution of the contract, in all fairness, the Electricity Board ought to have reimbursed the petitioners all such liabilities. Learned counsel in this regard further contends that although the service tax is not specifically mentioned in Section 64A of the Sale of Goods Act but the contract of the petitioners is a work contract which is a holistic contract including within itself a contract for supply of goods and for supply of service, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork. It is further submitted that in case of any doubt the same had to be clarified before submitting the tender which has not been done by the petitioners. Learned counsel further submits that there is absolutely no ambiguity in the said Clause 1 of the Instructions to the Tenderers and thus the principles laid down in the case of Bank of India Vs. K. Mohandas (supra) are not at all applicable in the present matter. The provisions of Service Tax were introduced by the Finance Act, 1994. However, the same at that time applied only to a limited number of items and not to all forms of service. Subsequently, from time to time a large number of services were brought under the scheme by amendment of the provisions of the Finance Act, 1994. Under Section 65 (105) (zzzza) 'taxable service' means any service provided or to be provided to any person by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. The said provision was brought into effect from 1.7.2007. It is not in dispute that the work in question under the agreement between the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson who is liable to pay service tax and has collected any amount in excess shall forthwith pay the amount to the credit of the Central Government. Thus, from the scheme of the Finance Act, 1994 which introduced the concept of service tax and the liability for payment of service tax, it is evident that so far as the Act is concerned, the liability of paying the service tax has been fixed upon the service provider. True, it is that the service provider has the right to collect the said tax from the person to whom service is provided but so far as the Excise and Service Tax Department is concerned, it holds the provider of service as liable to pay the service tax. There is no provision in the said Act for recovery or reimbursement of any service tax by the service tax provider from the person to whom the service is provided. Thus, it is the liability of service provider to pay the service tax arising in the course of the provision of service and to provide for its collection in the contract which it enters into with the person who is recipient of the service. This Court is also of the view that the provisions of Section 64A of the Sale of Goods Act, 1930 cannot be applied to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny specific ingredients of the work. Thus, splitting any item mentioned in Bill of Quantities has been specifically forbidden. Reasonably interpreted the said provisions mean that the rates or items of work, including all items of the work not shown or specified but reasonably implied or necessary, have to be indicated in the rates to be quoted by the tenderers. It would thus include the tax liability that fall upon such items of work whether they are in the nature of excise or customs or tax on sale or purchase of goods. Although service tax was not leviable at the relevant time on works contract but the same would also be deemed to have been included in view of the clear provision that the rate should be inclusive of direct or indirect elements. Thus, the said provision can only be interpreted to mean that any future increase or decrease of tax or levy of a new tax with regard to item of the contract would be entirely to the benefit or be the liability of the contractor and the same would not have any effect on the rates and service. There does not appear to be any ambiguity in the said provisions. The provisions, in fact, go further to show that it was the tenderer's duty to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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