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TMI Blog2023 (11) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is the petitioner/supplier who is to bear taxes in the GST regime as well - Even considering from a different perspective, the petitioner also has a statutory obligation under the GST Act, as a supplier, to bear GST. In the present case, no new liability is being imposed on the petitioner which was not contemplated in the original contract and the tender document. The petitioner was clearly to bear VAT, Sales Tax and similar other statutory levy, including all indirect taxes payable for the service chain. The expression similar other statutory levy/cess in the relevant clause of the contracts makes it abundantly clear - The GST regime has only introduced a common taxation for the entire supply chain which subsumes and does not add to the previous taxes payable on such count. Hence, the argument that the petitioner is saddled with a new liability beyond the contract is untenable in law and in fact. Thus, it is the petitioner who is liable to pay the GST - In the present case, there is no reason to deviate from the literal rule of construction, since the plain meaning of the relevant taxation clause in the contracts is unambiguous. Secondly, even if the autonomy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also given accordingly. 2. Subsequently, with the introduction of the Central Goods and Services Tax Act, 2017 (for short, the GST Act ), the entire tax regime changed. Hence, the petitioner was compelled to bear huge additional taxes which was beyond the contemplation of the contract between the parties and/or the tender. 3. The writ petitions have been filed for refund of the payments made by way of Goods and Services Tax (GST) by the petitioners in respect of the different work orders. 4. Learned counsel for the petitioner argues that the contract is a commercial document between the parties and must be interpreted in a manner to give efficacy to it rather than to invalidate it. The courts, it is contended, have to adopt a pragmatic, and not a technical, approach while interpreting or construing clauses of the contract. 5. In support of such contention, learned counsel cites Nabha Power Limited (NPL) v. Punjab State Power Corporation Limited (PSPCL) and another, reported at (2018) 11 SCC 508 and Enercon (India) Ltd. and others v. Enercon GMBH and another, reported at (2014) 5 SCC 1. 6. Next citing United India Insurance Co. Ltd. v. Harchand Rai Chandan L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been no effective alteration in the contract between the parties, which is unambiguous in its terms, merely by introduction of the GST regime. 15. Learned counsel cites Bipson Surgical (India) (P) Ltd. v. State of Gujarat, reported at 2018 SCC OnLine Guj 4832 , where a Division Bench of the Gujarat High Court observed that in Rashtriya Ispat Nigam Limited, the Supreme Court had observed that the statutory provision can be of no relevance to determine the rights and liabilities between the parties as agreed in contract between the two of them. It is accepted and conventional in commercial practice to shift such liability to the contractor. If a change of taxation was to be read as meaning that the contractor would be liable only to honour his own tax liabilities and not the liabilities arising out of the obligations under the contract, there was no need to make such a provision in a bilateral commercial document. 16. It is argued that the petitioner is, thus, liable to pay taxes under the GST Regime as per the statute; hence, the writ petitions seeking refund of such amounts already paid by the petitioner on account of GST should be dismissed. 17. Heard learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be accepted in the present case, the terms of the contract would be altered and re-written, which has been deprecated in Polymat India (P) Ltd. (supra), also cited by the petitioner. 23. The relevant clause in the contract contemplates that the contractor/bidder is to quote its rate accordingly after considering all these charges , thus referring to the taxes mentioned therein. Such taxes were Income Tax, VAT, Sales Tax, Royalti, Construction Workers Welfare Cess and similar other statutory levy/Cess . 24. The argument of the petitioner that a new tax regime has been introduced, imposing additional taxes, is self-defeating. The relevant clause clearly indicates that all indirect taxes are also to be paid by the petitioner. By way of example, VAT, Sales Tax, etc., have been mentioned and similar other statutory levy has also been included in the contract, to be borne by the contractor. 25. The GST Act has merely subsumed the indirect taxes payable by a supplier for the entire service chain and has not introduced any additional set of taxes. 26. Hence, it was not beyond the ken of the petitioner that it was the petitioner s liability to bear all indirect taxes for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory levy, including all indirect taxes payable for the service chain. The expression similar other statutory levy/cess in the relevant clause of the contracts makes it abundantly clear. 33. The GST regime has only introduced a common taxation for the entire supply chain which subsumes and does not add to the previous taxes payable on such count. Hence, the argument that the petitioner is saddled with a new liability beyond the contract is untenable in law and in fact. 34. In view of the above discussions, it is the petitioner who is liable to pay the GST. 35. The petitioner also cites judgments, in particular Sime Darby Engineering SDN. BHD. (supra), to indicate that policy decision cannot change a contractual clause. In the present case, however, there has been no change to the contractual clause. Read as it is, the petitioner is liable under the clause to bear all taxes which have been subsumed by the GST Act. Rather, if the petitioner s interpretation is to be accepted, the petitioner would be entirely absolved of all taxes, which would be tantamount to deletion of the taxation clause altogether and have the effect of the contract being re-written by the court. 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es is unambiguous and clear and there is no option or need for the court to interpret it in its own manner. 42. Secondly, commercial viability is not one-way traffic and business efficacy does not necessarily mean that an unfair advantage has to be subsequently extended to the contractor. The contracts between the parties, even if commercial in nature, laid down all the broad contours and parameters of the transactions. The petitioner agreed fully to it and acted in terms of the same, as did the respondents. 43. All commercial contracts obviously include an element of calculated business risk which includes the enhancement or reduction in taxes. Even if the petitioner argues that the taxes have been enhanced, the same was factored into the original clauses of the contract. Mere replacement of Sales Tax, Excise Duty, VAT and other similar taxes by the GST regime does not change such parameters in any manner. In fact, even Sales Tax, VAT, Excise Duty and other levies specifically enumerated by way of example in the contract can very well be enhanced from time to time by the revenue authorities. If the petitioner argues that mere replacement of GST entitles the petitioner being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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