Service tax reimbursement denied where the statute placed liability on the contractor and the tender terms made tax risk part of the quoted price.

Service tax under the Finance Act, 1994 was payable by the service provider, who was responsible for registration, returns and payment, and the statute created no right of reimbursement from the service recipient. Section 64A of the Sale of Goods Act, 1930 did not apply because it governs goods, not services. The tender terms required quoted rates to be inclusive of all direct and indirect ingredients, so any later increase or introduction of tax fell on the contractor under the contract. The claim for reimbursement was therefore rejected.

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Issues: Whether the petitioners were entitled to reimbursement of service tax paid on execution of the works contract, and whether the contract or the statutory scheme shifted that burden to the respondent-Board.

Analysis: Service tax under the Finance Act, 1994 was held to be statutorily payable by the person providing the taxable service, with the service provider responsible for registration, return filing, and payment. The Court held that there was no provision in that Act creating a right of reimbursement from the recipient of the service. Section 64A of the Sale of Goods Act, 1930 was held inapplicable because it governs goods and not services. On the contractual clause, the Court held that the tender conditions required rates to be quoted inclusive of all direct and indirect ingredients, leaving no ambiguity, and that any future increase or introduction of tax would fall on the contractor.

Conclusion: The claim for reimbursement was rejected and the writ petition was dismissed.

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