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TMI Blog2022 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... service provider has to pay service tax to the Department. Section 68(2) introduced the concept of reverse charge mechanism under which the service recipient is liable to pay tax and be assessed to tax. Be that it may, a plain reading of section 68(1) will reveal the petitioner in this case being the service provider has to pay service tax to the Department. However, it must be noted that service tax is an indirect tax and the burden of the tax can be passed on to service recipient provided the parties agreed upon to this effect. It is clear that irrespective of the fact who has to pay the service tax under statute, the parties by contract can fix the liability on any one between them. It goes without saying that if the contract is silent as in the instant case, one has to necessarily fall back on the statute to fix the liability. As rightly contended by the learned Standing Counsel for respondents, the agreement dated 20.07.2015 is silent on the liability of service tax being born by whom. Therefore, primarily the petitioner is responsible to pay the service tax - it is only an act of recommendation which has to be approved by the Executive Council. The same was not ratified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory requirement as per the notification issued by the Ministry of Finance (Department of Revenue), Government of India by according additional sanction. Subsequent to this decision, the petitioner paid service tax on every bill on four occasions without any delay in accordance with law. The District Audit Officer, Chittoor, also opined that the service tax has to be paid and reimbursed. The concerned Service Tax Department also clarified vide its letter dated 18.09.2017 that the service tax has to be paid. So also the Assistant Commissioner of Customs Central Excise Department confirmed that service tax has to be paid. In that view, the petitioner made a representation dated 26.09.2018 by enclosing copy of the order in W.P.No.32048/2018 requesting the respondent authorities to reimburse the service tax paid by the petitioner. In response, the 1st respondent informed that the order of this Hon ble Court will be placed before the Executive Council and action will be taken thereafter. (c) Subsequently the petitioner submitted two other representations dated 22.11.2018 and 12.04.2019 reminding the respondents about the reimbursement of service tax, but there was no proper res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsity paid the bills. There was no provision for payment of service tax either in the SSR 2013-14 or in the agreement. (b) It is further contended that in respect of adjudication of any financial claim that may arise concerning the execution of contract with the petitioner, there is a specific clause incorporated in the agreement i.e., clause 3(ii) of Articles of agreement dated 20.07.2015 whereunder all claims exceeding ₹ 50,000/- in value shall be decided by a competent Civil Court by way of regular suit. Hence, the writ petition is not maintainable and petitioner has to approach competent Civil Court to get an adjudication. (c) The resolution passed in the meeting of Building Committee dated 20.02.2016 requires to be ratified and approved by the Executive Council in its meeting. As such the resolution passed by the Building Committee which is only a recommendatory in nature cannot be relied upon by the petitioner to make a claim. In this context, it is submitted that the resolution of the Building Committee was not subsequently ratified by the Executive Council. The provisions were made in the agreement dated 20.07.2015 only with regard to payment of VAT at 5% an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the Executive Council of the respondent University did not approve or adopt notifications pertaining to payment of service tax. As there is no specific clause in the agreement, the respondent University is not under the contractual obligation to reimburse service tax to the petitioner. Hence, the writ petition may be dismissed. 7. Heard arguments of Sri K.Srinivasulu, learned counsel for petitioner, and Smt. P.Padmavathi, Standing Counsel for the respondents. 8. Reiterating the pleadings of the writ petition, learned counsel for petitioner would submit that the estimates for construction of Library Building for the 1st respondent University were approved in the year 2014, by which time service tax was exempted in respect of services provided under works contract to educational institutions i.e., respondent University. Therefore, the respondent authorities might not have included service tax component in the estimates. However, by the time notification was issued and agreement was entered into in July 2015, the service tax exemption earlier granted on educational institutions was withdrawn by the Central Government and unaware of this fact the petitioner as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsibility of payment of tax on a particular party to the contract. Since there is no such express term employed in the contract, learned counsel emphasized, respondent University is not liable to pay or reimburse the service tax. She further argued that the Building Committee of the University made only a recommendation to the Executive Council which is the final authority to take a decision on the financial aspects. The Executive Council having considered the factual and legal aspects rightly rejected the request of the petitioner. Therefore, the petitioner cannot shore upon his claim on the mere recommendation of the Building Committee. Learned counsel further argued that as per clause 3 of the Articles of agreement, any claim exceeding ₹ 50,000/- relating to the contract shall be decided by a Civil Court of competent jurisdiction by way of a regular suit and in that view, writ petition is not maintainable. She thus prayed to dismiss the writ petition. 10. The points for consideration are: (1) Whether the respondent University is liable to reimburse the service tax to the petitioner? (2) Whether the writ petition is not maintainable in view of the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in force was deleted w.e.f. 01.04.2015 (check date). However, in respect of the same works, for which, the agreement was entered prior to 01.03.2015, exemption was again provided by inserting new clause 12(A) under the said notification. 12. Be that it may, perhaps not knowing these developments, the respondent University issued tender notification NIT No.08/DU/Engg/201415 on 09.03.2015 i.e., within short time after the issuance of notification No.6/2015 dated 01.03.2015 deleting the exemptions. Since the petitioner emerged as successful tenderer, agreement was entered into by the parties on 20.07.2015. Thus, it is significant to note that tender notification and agreement were taken place subsequent to deletion of exemption on construction works for Government. However, in the tender notification and in agreement, the parties did not mention anything about the service tax payable to the Department, obviously, being unaware of the above developments regarding payment of service tax as stated supra. 13. While so, the petitioner on phase-wise completion of the work, used to submit bills for payment. At that time, he came to know that service tax was payable in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x in each of the part bills raised by him as follows: Sl. No. Bills Gross Amount Taxable Value (40% on gross) Percentage of Tax Service Tax Challan No. and date 1 1 st Part Bill 82,76,807.00 33,10,723.00 14.50% 4,80,055.00 10880 dt.03.06.2016 2 IInd Part Bill 48,35,635.00 19,34,254.00 15% 2,90,138.00 01671 dt.01.10.2016 3 IIIrd Part Bill 84,53,019.00 33,81,208.00 15% 5,07,181.00 00001 dt.27.01.2017 4 IVth Part Bill 1,04,91,491.00 41,96,596.00 15% 6,29,489.00 03034 dt.20.04.2017 5 Final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roach to a Negative List Regime . This changed the taxation system of services from tax on the specified services to tax being levied on all services other than those mentioned in the negative list or which were exempted by a notification. It is in this context, vide notification No.25/2012 Service Tax dated 20.06.2012, initially the service tax was exempted on the services provided to the Government, a local authority or a government authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of different structures, one of which is the structure meant predominantly for educational use. Later this exemption was withdrawn by way of another notification No.6/2015 Service Tax, dated 01.03.2015. The said notification came into force w.e.f. 01.04.2015. Therefore, it is clear that by 01.03.2014 i.e., on the date of approval of the estimates by the Executive Council and by 09.03.2015, i.e., the date on which tender notification NIT No.08/DU/Engg/2014-15 was issued, the exemption of service tax was in force. However, by 20.07.2015, the date on which agreement was entered into by the parties, the exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the submission of shifting of tax liability is concerned, as observed in paragraph 9 of Laghu Udyog Bharati (Supra), service tax is an indirect tax, and it is possible that it may be passed on. Therefore, an Assessee can certainly enter into a contract to shift its liability of service tax. Though the Appellant became the Assessee due to amendment of 2000, his position is exactly the same as in respect of Sales Tax, where the seller is the Assessee, and is liable to pay Sales Tax to the tax authorities, but it is open to the seller, under his contract with the buyer, to recover the Sales Tax from the buyer, and to pass on the tax burden to him. Therefore, though there is no difficulty in accepting that after the amendment of 2000 the liability to pay the service tax is on the Appellant as the Assessee, the liability arose out of the services rendered by the Respondent to the Appellant, and that too prior to this amendment when the liability was on the service provider. The provisions concerning service tax are relevant only as between the Appellant as an Assessee under the statute and the tax authorities. This statutory provision can be of no relevance to determine the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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