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TMI Blog2024 (10) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... of coach attendant for bed-roll distribution for various trains at Santragachi Coaching Depot for a period of one year. The respondent participated and came out successful. Accordingly, a Letter of Award (LoA) was issued to the respondent on June 25, 2015 and consequentially an agreement was executed between the parties on September 26, 2015. The respondent completed the work and raised invoices and was paid the dues for such work by the petitioner. 3. On November 17, 2017, a show-cause notice was issued by the Tax Authorities to the respondent claiming Service Tax on the work done under the contract, along with interest. The respondent ultimately paid the dues at a discounted rate under the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 and made a demand for such amount from the petitioner. The petitioner having not acceded to such claim, the matter was referred to arbitration, the respondent claiming the entire amount of Service Tax and interest paid thereon. 4. The Arbitral Tribunal granted such claim by its award dated November 28, 2023, against which the present challenge has been preferred by the Railway. 5. Learned counsel for the petitioner/Railway argues that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned counsel for the respondent that the respondent raised bills for Service Tax which were accepted without demur by the petitioner/Railway, although no payment was made on such account. It is argued that since the scope of work was manpower supply, the work does not attract VAT, Sales Tax, Excise Duty or Octroi as mentioned in Clause 2.2, nor does it involve lifting, descent, insurance, etc., mentioned as incidental charges in the said Clause. Thus, the general terms included in Clause 2.2 of the contract have no applicability to the instant case. 13. It is argued that the Arbitral Tribunal took into consideration the approximate cost of work as mentioned in the tender, the break-up of which was to be found in the detailed Estimate annexed to the Affidavit-in-Opposition of the respondent. The said breakup did not contain Service Tax. The Arbitral Tribunal further found that Service Tax was nowhere mentioned in the agreement and could not have been considered by the petitioner while quoting its price. Learned counsel argues that even the Railway was not aware about the potential liability of Service Tax and as such, the inclusion of Service Tax in the price quoted could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. 21. Upon hearing learned counsel for the parties, the Court arrives at the following conclusions: 22. The pivot of the arguments is Clause 2.2 of the "Instructions to Tenderers and Terms & Conditions of Tendering" which finds place in Part I of the tender document, which comprises the contract between the parties. 23. Clause 2.2 is set out below: "2.2 UNIT PRICES: The Rates quoted by the Tenderer and accepted by the purchaser shall hold good till the completion of the work and no additional individual claim will be admissible on account of fluctuation in market rates etc. The rate quoted by the Tenderer shall include all incidental charges like, freight transport, loading/unloading handling of material, lifting, descent, insurance overage of Bankers charges, Indemnity Bond, VAT, Sale Tax, Excise Duty, Octroi and other taxes and duties etc. Tenderer should carefully read as clearly explained in the explanatory schedule." 24. Certain relevant dates are also to be taken note of while adjudicating the issues at hand. 25. The tender was floated on April 14, 2015 and the bids were opened on May 27, 2015. LoA was issued to the respondent on June 25, 2015, pursuant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated March 27, 2015, that is, much prior to the LoA being issued to the respondent. As on the date of the Estimate, Service Tax was not made applicable to Railway works. Thus, there cannot arise any question of the Estimate including the Service Tax component. 34. Secondly, and more importantly, the Estimate was merely a wage calculation, which is self-evident, and no tax component was incorporated in it. The Estimate was only for the purpose of calculation by the Railway Authorities themselves in order to arrive at a rough estimated cost of the work for the purpose of issuing the tender. Neither was the Estimate communicated to the respondent, nor was it incorporated in any manner either in the tender or the contract itself or referred to any subsequent correspondence between the parties. 35. The bidders were to raise quotations by taking into account not only the Estimate of the Railway, which was its own internal document and restricted to the wages payable for the work, or the cost of work mentioned in the tender, but also taking into account estimated taxes and/or duties or other similar liabilities which they would have to incur in order to do the work. The bidders took a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1996 Act, as reiterated in the State of Chhattisgarh (supra). 41. Insofar as the statutory payability of Service Tax is concerned, the impact and incidence of such tax is segregated by the statute itself, which impels the renderer of the service at the first instance to make the payment which may be ultimately realizable from the recipient of the service. If the impact and incidence of Service Tax were simultaneous, it might still have been argued by the respondent that the parties could not retract from a statutory liability by agreement between themselves. However, the statute merely imposes Service Tax. The payability, being divided into two components, impact on one entity an incidence on another, the impact and incidence can be segregated and one of the components may very well be waived by the parties. Hence, Clause 2.2, insofar as its applicability to incidence of Service Tax is concerned, does not tantamount to Estoppel against the law. 42. Learned counsel for the respondent places reliance on Associate Builders (supra) and National Highways Authority of India (supra) to argue that the Arbitral Tribunal could very well have considered materials on record and corre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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