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TMI Blog2024 (6) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... as regards what was to happen in the event of a duty being increased. The second pre-condition is that the change in the rate of duty was affected after the date of the contract. This very provision of Section 64 A of the Act of 1930 was relied upon by the Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT ] in the context of examining the application of the principle of unjust enrichment and it was held that in view of the ability of the seller to recover the increase in the difference of excise or customs it would be legitimate for the Court to presume, until contrary is established that a duty of excise or customs have been passed on by the seller to the buyer. In the instant case, it may not be a case of reduction in rate of tax on any supply of goods or services but it may be a case where there might be benefit of input tax credit which have been availed by the petitioners taking into account that in the writ petitions, the works have been completed after 01.07.2017. Under such circumstances, these aspects of the matters also are required to be considered by the authority concerned. The Circular No. 3/2017-GST dated 24.08.2017 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t authorities. 2. Before deciding the issues, this Court finds it relevant to take note of the brief facts involved in the instant batch of writ petitions:- WP(C) No. 4201/2020 3. The petitioner herein is a Class 1A contractor under PWD (Roads) Division. A Notice Inviting Tender (NIT) was issued by the respondent No. 3, i.e. the Chief Engineer, PWD (R) dated 26.12.2016 for construction of roads from DMB Hill Road to Bhuban Nagar via Panichaki Khasia Punjee including 2 nos. of RCC bridge (Ch.0.00 m to 1000.00 m) under RIDF-XXII of NABARD under PWD, Silchar Rural Road Division for the year 2016-17, Package No. Cachar/RIDF-XXII/07 at a Bid price of Rs. 3,04,13,271.00p. The said NIT when issued, the Act of 2003 was in effect. The petitioner submitted his bid along with others and while submitting his bid, the petitioner added existing rate of 5% VAT in his quotation. After the evaluation of all bids which includes financial bids, the respondent No. 3 accepted and approved the bid of the petitioner at a Bid value of Rs. 3,04,13,271.00p. Thereupon, the administrative approval was affirmed through sanctioning order No. RBPC/97/2016/Pt-III/27 dated 11.04.2017 with certain conditions. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s otherwise provided under the contract, shall include all Impale plant, labour, supervision, materials, erection of display board, sign/caution board, maintenance during Imp, insurance, profit, taxes and duties, together with all general risks, liabilities and obligations set out or implied in the Contract. Clause 5 of the said Preamble stipulates that the rate or a price shall be entered against each item in the Bill of Quantities, whether quantities are stated or not. The cost of items against which the Contractor has failed to enter a rate or price shall be deemed to cover by other rates and prices entered in the Bill of Quantities. The rate should be quoted considering all the taxes. Clause 10 stipulated that income tax, Labour Cess, AVAT would be deducted from each bill of the Contractor as per the Prevailing rate. WP(C) No. 7169/2018 6. The petitioner herein is a registered Contractor in General Category under Hailakandi Municipal Board, Hailakandi. Pursuant to a Short Tender Notice dated 07.09.2015 issued by the Executive Officer, Hailakandi Municipal Board inviting sealed tenders from the eligible registered contractors under the Hailakandi Municipal Board, the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents to include the additional tax amount in the bills raised by the petitioner. 8. This Court finds it relevant to take note of Annexure-2 to the writ petition which is the notice inviting tender. It was mentioned that VAT and Income Tax registration, up to date contractor registration, up to date labour license and other particulars are to be submitted along with the tender without which no tender will be considered. It was also mentioned that VAT, Income Tax, Forest Royalty & labour welfare cess etc. as per Government norms will be deducted from the contractors' bill. It is however relevant to take note of that the rest of the tender documents containing the various terms and conditions are not the part of the writ petition. 9. It is relevant to take note of that pursuant to the filing of the instant writ petition, this Court vide an order dated 09.10.2018 issued notice. This Court further in the interim directed that no coercive action shall be taken by the respondents regarding payment of the GST. 10. The records further reveal that an affidavit-in-opposition was filed by the Commissioner of Taxes. In the said affidavit reference was made to a Circular No. 3/2017-GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as further mentioned that work contract which was partially executed on or after 01.07.2017 and the invoices were raised during the GST regime and the payment was received during the GST regime it was stipulated that since the transaction was not accounted for under the Act of 2003, the TDS will be made as per the provisions of the relevant GST Acts. The said Circular No. 3/2017-GST also dealt with the supply of goods/services and from the said, the following transpires:- (i) Supply of goods made upto 30/06/2017 and the bills/invoices etc. also have been raised on or before 30/06/2017 (during VAT period) but the payment is pending or made on or after 01/07/2017: In respect of such payment, deduction of tax at source will be made as per the provisions of section 47(3) of the Assam VAT Act. (ii) Supply of goods made upto 30/06/2017 etc but bills/invoices etc have been raised on or after 01/07/2017 (during GST Period) and the payment is pending or made on or after 01/07/ 2017: In respect of such payment, deduction of tax at source will be made as per the provisions of Section 51 of the Assam GST Act, 2017. (iii) Supply of goods partially made on or before 30/06/2017 (during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of Assam, Finance Department whereby the DDOs of the Government Departments/undertaking/agencies/local authorities were directed to make the payment to the works contractors or suppliers without deducting GST in respect of such work contracts or supplies which fall under the purview of the GST till such date was notified by the Government. It was however mentioned that the contractors/suppliers shall deposit the full amount of GST in respect of such work contracts/supplies where no deduction of tax at the source has been made by the DDOs. The said direction issued by the Principal Secretary to the Government of Assam, Finance Department assumes importance in view of the fact that in most of the writ petitions, no deduction of GST has been made till date as submitted by the learned counsels for the petitioners in the batch of writ petitions. WP(C) No. 1610/2019 14. The petitioner herein is a registered Contractor in General Category under Hailakandi Municipal Board, Hailakandi and pursuant to a short Tender Notice dated 05.08.2015 issued by the Executive Officer, Hailakandi Municipal Board inviting sealed tenders from the eligible registered contractors under the Hailakand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 issued notice and in the interim directed the respondents not to any coercive steps against the petitioner for non-payment of the GST against the contract bills. It was further observed that pendency of the writ petition shall not be a bar for the petitioner to pay the GST dues. WP(C) No. 3694/2019 16. The petitioner herein a registered Class 1(B) contractor registered with the Government of Assam and the PWD Department. Pursuant to a bid, the petitioner was allotted certain works under the Jorhat Rural Roads Division under the Executive Engineer, PWD (Roads), Jorhat Rural Roads Division. Two of these works which are the subject matter of the present petition are (i) the construction of road from Hatimuria to Kamar Gaon Tiniali via Bhuyanhat Gaon, (from Ch 2312.00m to Ch 3019.00m, L=.707 Km) under A.P. (SCSP Area) for the year 2015-16, Mariani LAC and (ii) construction of Bhogpur Satra Approach Road (from Ch 0.00 m to Ch 1026.00m) under RIDF-XXII of NABARD for the year 2016-17). The work at Sl. No. (i) was allotted on 16.02.2016 and in respect to the work at Sl. No. (ii) on 20.06.2017 which were prior to the commencement or implementation of GST regime in the State of Assam. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner was asked to pay GST applicable @12% over the said amount. 19. Similarly, the petitioner was also allotted a work for improvement of approach road to the proposed permanent Ro-Ro service (Dhubri-Hatsingimari) Ghat under IWAI under the Executive Engineer, PWD, Dhubri Rural Road Division and issued final work order dated 11.09.2017 by the Chief Engineer, PWD (Roads), Assam. The total value of the work was Rs. 1,23,30,278.00p. Upon received of the final work order, the petitioner started the work and claims that the petitioner received R/A bills from the PWD after deducting VAT @ 5% from the respective bill amount as at the relevant point of time, the VAT was applicable. At this stage, this Court finds it relevant to observe that the said statement made in the writ petition is contrary to the GST scheme and circular in as much as if the work order was issued on 11.09.2017, how there could be deduction of tax under the Act of 2003, that too, when the Act of 2017 and the CGST came into effect from 01.07.2017. The petitioner further claimed that the petitioner completed the work and the payments were by made by the PWD in two installments, i.e. Rs. 41,24,981.00p on 21.01.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sought for other reliefs. The Circular No. 3/2017-GST has also been put to challenge in the instant writ petition. 22. It reveals from the records that this Court vide an order dated 04.10.2019 issued notice. The petitioner was allowed to deposit the admitted amount of Rs. 14,05,233.00. However, it was also observed that as regards the balance amount alleged to be due to be paid by the petitioner, the same would be subject to the outcome of the writ petition and no coercive action should be initiated against the petitioner as regards the balance amount. WP(C) No. 8628/2019 23. The petitioner herein is a registered Class I(A) Contactor registered with the Government of Assam and the PWD (Roads & Building) Department. The petitioner herein was allotted various works details of which are as under: (i) A contract for improvement of Dhubri Jagrarpur Gauripur Road under SPA for Development Programme of Riot affected areas under Dhubri district for 2012-13, Phase-I (From Ch. 2000.00m to Ch. 6820.00m including conversion of SPT Br. No. 6/1 to RCC Bridge) under the Executive Engineer, PWD, Dhubri Rural Road Division by issuance of a final work order bearing on 21.09.2013. The value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST on the said amount. 24. The petitioner herein similar to other writ petitioners challenged the Circular No. 3/2017-GST and had also sought for a mandamus directing the respondent authorities to revise the work estimate value in respect to the contract works awarded to the petitioner and simultaneously deduct the enhancement value in order to meet/equalize the differential in the higher tax on the Book of the State Exchequer. 25. It reveals from the records that this Court vide an order dated 22.11.2019 issued notice and in the meantime directed no coercive action shall be taken against the petitioner till the next date. WP(C) No. 9052/2019 26. The petitioner herein is a registered Class 1(B) Contactor, registered with the PWD (Roads) Department, Government of Assam. The petitioner was awarded two contracts the details of which are as under:- (i) The petitioner was awarded the contract for work for the improvement of Repair and Rehabilitation of Sualkuchi Phulbari Pahar Road (E & D) office bye lane for the year 2015-16 under the Executive Engineer, PWD (R), Guwahati Road Division and was issued work order on 24.12.2015 by the Superintending Engineer, PWD (Roads), Guwahati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Finance and Taxation Department of the Government of Assam that the said affidavit be taken as the stand of the Finance and Taxation Department of the Government of Assam in respect to all other writ petitions. The other Respondents under whom the contracts were executed did not file them affidavit-in-oppositions inspite of the fact that these writ petitions have been pending since 3 to 4 years. This Court expresses great displeasure at such indifference shown by those Departments for reasons best known. 30. This Court has duly heard the learned counsel for the parties and also perused the materials on record. The two primary issues have already been delineated above. To recapitulate the same, the first pertains to as to whether the Circular No. 3/2017-GST is required to be interfered with. The second would arise, if the first is decided against the petitioner, i.e. to whether the petitioners herein would be entitled to claim the differential 7% increase in the tax on account of the GST from the respondent authorities. 31. Let this Court first analyze the challenge made to the Circular No. 3/2017-GST. From the pleadings as well as the contentions of the learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act of 2017 as well as CGST, both these Acts came into operation w.e.f. 01.07.2017. The said Acts were made for levy and collection of tax on intra-State supply of goods or services or both by the State of Assam and Union respectively and matters connected therewith or incidental thereto. 34. Section 12 & 13 of the said Act of 2017 and CGST are pari-materia. Being relevant for the purpose of deciding as regards the legality and validity of Circular No. 3/2017-GST dated 24.08.2017, the same requires to be looked into. Section 12 relates to time of supply of goods whereas Section 13 relates to time of supply of services. For the purpose of the instant case and taking into account the facts involved, Sub-Section (1) and (2) of Section 12 and Sub-Section (1) and (2) of Section 13 of the Act of 2017 are quoted herein below:- "12. (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of goods shall be the earlier of the following dates, namely:- (a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o his bank account, whichever is earlier. 35. A perusal of the above quoted provisions would show that Section 12 relates to time of supply goods. As per Sub-section (1) of Section 12, the liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of the said section. Sub-section (2) of Section 12 stipulates that the time of supply of goods shall be the earlier of the following dates, namely, (a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply. 36. Section 13 is in relation to time of supply of services. Sub-section (1) of Section 13 stipulates that the liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of Section 13. Sub-section (2) of Section 13 stipulates the time of supply of services shall be the earliest of the dates stipulated in sub-clauses (a), (b) and (c). Sub-clause (a) stipulates that the date of issue of invoice by the supplier, if the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners, the same cannot be a ground for interfering with the said impugned Circular No. 3/2017-GST dated 24.08.2017. 40. In the backdrop of the above, it is the opinion of this Court that the petitioners herein would be liable to pay GST in respect to the payment received as well as receivable pertaining to the works in question where invoices were raised after 01.07.2017. Under such circumstances, let this Court take up the next issue as to whether the petitioners herein would be entitled to claim an additional 7% from the concerned respondent authorities who have awarded the contracts on account of the increase in the tax element due to the implementation of GST. At the outset, this Court finds it relevant to take note of that from the materials placed before this Court by the petitioners, the terms under which the petitioners were awarded the contracts in question, more particularly as to what constituted the price at which the contracts were awarded could not be ascertained due to non-placing of documents forming the contract. At the same breath, this Court finds it relevant to observe that had the Respondents filed their affidavits, then the said would have been mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 43. A perusal of Sub-section (1) of Section 64A reveals that if any of the enumerated at Sub-section (2) of Section 64 A is "imposed, increased, decreased or remitted" in respect of goods governed by the contract in consideration, certain consequences follow. Dissected thus, the said provision deals with four specific situations, i.e. (i) imposition of new taxes; (ii) increase in existing taxes; (ii) decrease in existing taxes or (iv) refund of taxes provided that such imposition, increase, decrease or refund specifically relates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er would be entitled to recover the duty from the buyer provided : (a) there was no contract to the contrary by which he had precluded himself from claiming such enhanced duty i.e. the contract having negative or limited the seller's right to prefer such a claim, or was at least silent as regards what was to happen in the event of the duty being increased, (b) the change in the rate of duty was effected after the date of the contract. In these circumstances, it appears to us that there might not be even a factual basis for the complaint of Learned Counsel for the appellants that in the case of a retrospective increase in duty, the duty ceases to be a duty of excise by becoming a "direct" tax because it was incapable of being passed on. The answer of Learned Counsel to this point regarding the operation of Section 64-A of the Sale of Goods Act was merely that the Court could not take account of the provisions of another statute for dealing with the validity of a provision of the Finance Act, 1951. This submission his no force at all because Section 64-A of the Sale of Goods Act refers in express terms to "duties of excise" and has, therefore, to be read as part and parcel of every l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court at this stage finds it further relevant to take note of another judgment of the Supreme Court in the case of Rashtriya Ispat Nigam Ltd. vs. Dewan Chand Ram Charan, reported in (2012) 5 SCC 306. In the said case, the contract had a Clause which is Clause 9.3. The said Clause is quoted herein under as the same would entail a better understanding to the concept so provided by the Supreme Court in the said case:- "4. Clause 9.3 thereof reads as follows: "9.3. The contractor shall bear and pay all taxes, duties and other liabilities in connection with discharge of his obligations under this order. Any income tax or any other taxes or duties which the company may be required by law to deduct shall be deducted at source and the same shall be paid to the tax authorities for the account of the contractor and the company shall provide the contractor with required tax deduction certificate." 49. From the above quoted Clause 9.3, it would show that it was agreed to that the contractor shall bear and pay all taxes, duties and other liabilities in connection with discharge of his obligations under the contract. Any income tax or any other taxes or duties which the company may be req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee can certainly enter into a contract to shift its liability of service tax. 38. 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 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. 39. 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 rights and liabilities between the appellant and the respondent as agreed in the contract between the two of them. There was nothing in law to prevent the appellant from entering into an agreement with the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. (2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him. (3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed." 53. The above quoted provision would show that if there is no any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit availed by the seller, the same have be passed on to the recipient by way of commensurate reduction in prices. 54. In the instant case, it may not be a case of reduction in rate of tax on any supply of goods or services but it may be a case where there might be benefit of input tax credit which have been av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discerning the entitlement under the provisions of Section 64A of the Act of 1930, the terms of the contract are required to be looked into which would include inter-alia the obligation of the parties to the contract inter-se; the manner how the price/consideration is fixed; as to whether the price/consideration is firm, i.e. without price adjustment; whether the parties agreed to shift the burden of taxes amongst themselves. The said aspect would be dependent on the terms of each contract for which this Court had by way of illustration had given some of the perquisites. 56. In the backdrop of the above analysis, the instant writ petitions are disposed of with the following observations and directions:- (i) The Circular No. 3/2017-GST dated 24.08.2017 is in accordance with the provisions of Section 12 and Section 13 read with Clause 6 (a) of Schedule II of the Act of 2017 and CGST. (ii) The petitioners would be liable to pay GST @ 6% under the Act of 2017 and 6% under the CGST in respect to those invoices raised on or after 01.07.2017 and in respect to which received payments and/or receivable on or after 01.07.2017. Accordingly, the directions so issued in some of the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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