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TMI Blog2025 (3) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... being no repudiation of liability for discharging the service tax, it cannot be argued that there is an arbitrable dispute merely because a question as to who should pay, eventually arises. An arbitration clause of the kind even otherwise does not constitute a China Wall against exercising writ jurisdiction. In appropriate cases, Writ Court can grant relief when the answering respondent happens to be Article 12-Entity - It is not that the Writ Courts should invariably deny relief merely because the other side disputes the fact matrix, provided that the disputed facts can be ascertained from the pleadings & record. Liability of Railways to Reimburse Service Tax - HELD THAT:- On the principle of reimbursement as such, there is no dispute at all. The dispute is the extent of reimbursement in the sense that what is payable by way of service tax because of paradigm shift in the Legal Regime, with effect from 1.7.2012 i.e. post-contract period. Interpretation of Tender/Contract Clauses - HELD THAT:- Section 83 of Finance Act, 1994 read with Sections 12A & 12B of Central Excise Act, 1944 raises a presumption that the incidence of duty can be passed on to the buyer unless contrary is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby, appellant's W.P.No. 24097/2015 & W.P. No. 30354/2015 have been negatived. In the said petitions, essentially, he had sought for a Writ of Mandamus to the respondent- Railway to reimburse service tax component in terms of tender documents followed by contract in the light of subsequent amendment of law relating to Service Tax Regime w.e.f. 1.7.2012. The said amount has been quantified at Rs. 31,37,692/-. 2. Appellant, a company incorporated under the provisions of erstwhile Companies Act, 1956, is engaged in the business of providing wet washing services, wash bedrolls that are ordinarily used by the Railway passengers. During the period between 20.12.2009 & 11.06.2012, the appellant-Company has won thirteen agreements with the respondent-Railway in a public tender process for providing the services of collection of soiled linens, washing, loading of washed linens in coaches and supplying washed bedrolls to Railway passengers. All these contracts were entered into prior to 1.7.2012 i.e., the crucial date with effect from which the Service Tax Regime underwent a paradigm shift in the sense that what was selectively taxable became the exception, all services having become taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided for) then the same shall be referred to the Chief Commercial Manager of South Western Railway, whose decision shall be final." (b) The first contention of learned Panel Counsel appearing for the Railways that the arbitration clause would be an alternate & efficacious remedy and therefore consistent with learned Single Judge's order the appellant should explore the same, is bit difficult to countenance. Reasons for this are not far to seek: (i) Firstly, the arbitration clause is hit by the Apex Court decision in CENTRAL ORGANISATION FOR RAILWAY ELECTRIFICATION vs. ECI SPIC SMO MCML (JV) 2024 SCC Online SC 3219. Therefore, the subject arbitration clause is liable to be ignored for all practice purposes. (ii) Secondly, the question is not as to the liability to pay the service tax in respect of services in question; it is essentially as to who should pay this in the light of change of legal regime of taxation post conclusion of contracts. In fact, in Railways Reply Legal Notice dated 23.12.2014, at para 3, it is specifically admitted 'It is true that the service tax is indirect tax and has to be necessarily collected from the receiver of services. My client has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tically. Thus as per foregoing provisions the provider of service who is an assessee under Section 65 of the Finance Act has to collect service tax from the users of service." (b) There are certain paragraphs in the subject Legal Reply Notice which purport to repudiate claim of the appellant for reimbursement of tax component, is true. However, on the principle of reimbursement as such, there is no dispute at all. The dispute is the extent of reimbursement in the sense that what is payable by way of service tax because of paradigm shift in the Legal Regime, with effect from 1.7.2012 i.e. post-contract period. 5.3 AS TO SPECIFIC CLAUSES IN THE TENDER/CONTRACT DOCUMENTS: (a) The next contention of learned Panel Counsel is that the Price Bid for comprehensive work of supply, washing and distribution of Bed Rolls to the passengers of AC includes rate inclusive of all applicable taxes and levies etc. This argument is structured on the basis of clause (xvi) of Agreement No. 04/MECH/SBC/2012 dated 11.06.2012 which reads as under: "(xvi) Successful tenderer has to pay necessary Service Tax wherever levied or becomes leviable or as and when advised by the Service Tax Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice recipient vide Satya Developers Pvt. Ltd. vs. Pearey Lal Bhawan Association 2017 (3) GSTL 325 (Del.)., and; Meattles Pvt. Ltd. Vs. HDFC Bank Ltd. 2016 (42) STR 655 (Del.). (iv) When the contracts in question were entered into in the year 2011, both the parties had not contemplated change of legal regime with effect from 1.7.2012 from Positive List to Negative List eventually giving rise to new tax liability. It is not just change of rates of tax, but, very taxability. Therefore, the Railways have to bear the brunt vide Govt. of NCT vs. MBL Infrastructure 2012 SCC Online Del 1465. 5.4 AS TO DRAWING ANALOGY FROM SEC.64A OF THE SALE OF GOODS ACT, 1930: (i) The contention of the Railways that what has not been contemplated when the parties negotiated the contract, cannot be loaded to the shoulders of his client, merely because there is change of law, does not merit acceptance. There is a statute namely, the Sale of Goods Act, 1930 which regulates the contract of/for sale or purchase of goods. However, there is no corresponding statute of the kind in respect of service and labour. Section 64A of the Act that applies to sale of goods gives an indication as to who sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document which the Panel Counsel heavily banked upon as above have to be understood in the light of this provision. (iii) True it is, that section 64A as such cannot be invoked because the case does not relate to tax on goods; however that does not mean that the wisdom of its underlying principle cannot be made use of by analogy. We are aware of the difference between goods and services. There is terminological difference also when it comes to usage: ordinarily it is said 'goods are sold or bought' whereas 'service is rendered'. Goods are tangible whereas services need not be so. Consideration for sale of goods is price; such terminology is not employed when it comes to rendering of service. In a sense salary, wages, charges, etc. are employed in lieu of price. Of course, the words consideration is genus and price, salary, wages, charges, etc. are species. All this being said, there is one common thing between these two: Both are taxed, although under different statutes. The basic principle on which levy is enacted, thus largely remains the same, variance in modalities notwithstanding. All this we are saying to point out that there is nothing that bars drawing of wisdom of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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