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TMI Blog2018 (8) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Petitioner has not deposited the service tax and obviously cannot claim reimbursement of an amount which it has not deposited, no monetary claim is allowable in this matter - petition disposed off. - O.M.P. 121/2013 - - - Dated:- 14-8-2018 - PRATHIBA M. SINGH J. Petitioner Through: Mr. Devmani Bansal, Mr. Ajay Monga, Mr. Amol Sharma and Ms. Jagriti Ahuja, Advocates. Respondents Through: Mr. J.K. Singh, Standing Counsel with for Railways with Mr. Harsh Pandit and Ms. Madhulika Agarwal, Advocates. Prathiba M. Singh, J. (Oral) 1. The present petition has been filed challenging the award dated 9th November, 2012 passed by the arbitral tribunal constituted by the Railways. 2. The short point that is raised in this case is as to the liability to pay service tax and whether the Petitioner is entitled to reimbursement of the same. The Railways floated a Tender Notice No. Track-2/TM/2002 for Flash Butt Welding. The last date for submission of the bid was 15th January, 2003. The Petitioner herein, submitted its bid on 11th January, 2003. The relevant portion of the bid document reads as under: Our quoted price is incisive [sic inclusive] of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this contract. 5. This agreement shall deem to some into force with effect from 7.7.03. 4. The total cost of the contract was ₹ 7.22 crores. The cost of one weld was ₹ 1444/- inclusive of all taxes. The basis of the agreement were the documents dated 17th June, 2003, which consisted of the acceptance letter and the terms discussed in the pre-bid conference on 17th June, 2003. 5. The Finance was sought to be amended vide the Finance (No.2) Bill, 2004, by which `Business Auxiliary Service was proposed to be included. The Petitioner then addressed a letter dated 9th August 2004 to the Railways informing them of the said proposal and also took the stand that the Railways is liable to pay the same, as and when it becomes applicable. Vide letter dated 7th August, 2004 (actually issued on 28th August, 2004), the Railways clarified that the price agreed in the contract was inclusive of all statutory levies of the Central/ State Governments. The Finance Act was finally amended w.e.f. 10th September, 2004 and Business Auxiliary Service was added as a `taxable service w.e.f. the said date. By this Amendment to the Finance Act, service tax at 10% and cess o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that since the liability to deposit service tax is on the Petitioner under Section 68 of the Finance Act, 1994 and the price quoted by it was inclusive of all taxes, neither the service tax nor the interest component was liable to be reimbursed. The present petition challenges the said award. 8. Learned counsel for the Petitioner has taken the Court through the various clauses in the agreement and submitted that on the day of the bid i.e. 11th January, 2003, since service tax was not payable, the bid price could not have included the service tax component. He submits that the bid has to be interpreted on the basis of taxes that were payable on the date of submission of the bid and any liability thereafter cannot be imposed upon the Petitioner. He specifically relied upon the taxes and duties clause which clearly stated that even if excise duty is levied by the government on the said work, the same was to be reimbursed by the Railways. Learned counsel for the Petitioner relied upon Numaligarh Refinery Ltd. vs. Daelim Industrial Co. Ltd. (2007) 8 SCC 466 where levy of countervailing duty subsequent to the execution of the agreement was considered by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling duty was not there and it was introduced with effect from 1-1-1995 by the Customs Tariff (Amendment) Ordinance, 1994. New Sections 9, 9A and 9B were introduced. This Ordinance was subsequently replaced by the Customs Tariff (Amendment) Act, 1995 which was deemed to have come into force with effect from 1-1-1995. DIC submitted its initial bid on 16-3-1994 and final bid on 23-11-1994 by taking into consideration customs duty on imported materials at 25% as operative then. DIC could not have imagined the levy of countervailing duty at 12.5% brought into force with effect from 1-1-1995. Bid settlement was made on 24-11995 and NRL finally awarded the contract to DIC by fax of intent dated 31-1-1995. Therefore, the submission of DIC was that at the relevant time there was no countervailing duty and it came into force subsequent to the contract, therefore as per Section 64-A of the Sale of Goods Act, 1930, DIC is entitled to get this claim reimbursed. NRL contended that as per Clause 14.1 in the statement of claim pertaining to the contract, clear instructions were given to the bidders under Clauses 15, 15.1, 15.2, 15.3 that entire customs duties or levies including the stamp duty an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such goods tax-paid where tax was chargeable at that time,- (a) if such imposition or increase so takes effect that the tax or increased tax, as the case may be, or any part of such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to sue for and recover such addition; and (b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is paid or is payable, the buyer may deduct so much from the contract price as will be equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such deduction. (2) The provisions of sub-section (1) apply to the following taxes, namely;- (a) any duty of customs or excise on goods; (b) any tax on the sale or purchase of goods. This section also clearly says that unless a different intention appears from the terms of the contract, in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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