2016 (3) TMI 1004 - HC - Service Tax

Court dismisses petition for cable laying payment citing lack of contractual basis for Service Tax reimbursement.

The court dismissed the writ petition seeking payment release for cable laying works, citing lack of contractual basis for Service Tax reimbursement. The ... Seeking release of payments due to the petitioner along with suitable interest - Execution of the works in favour of the first respondent to the tune of ₹ 67 lakhs - Services carrying on are cable laying works and rehabilitation of external plant to various parties - Held that:- In the absence of any averment stated in the affidavit, filed in support of the writ petition that the petitioner got the leave from BIFR for filing the writ petition for claiming a sum of ₹ 67,00,000/-, the writ petition cannot be maintained at this stage. That apart, when the contract is between the first respondent and the petitioner, who is a sub contractor of the first respondent, the claim made by the petitioner to the tune of ₹ 67,00,000/- cannot be made in the writ petition. the contract was only between the first respondent and the BSNL and the petitioner is not a party to the said contract. Further, there is no clause in the contract between the first respondent and the petitioner with regard to the payment of Service Tax by the petitioner. In such circumstances, in the absence of any contract between the petitioner and the first respondent with regard to the payment of service tax and the reimbursement of the same, the said issue cannot be gone into in the writ petition. Therefore, the claim made by the petitioner can be decided only by a competent civil Court and not under Article 226 of the Constitution of India. - Decided against the petitioner Issues:1. Writ petition seeking Certiorarified Mandamus for payment release.2. Service tax liability on cable laying works.3. Reimbursement of Service Tax paid by the petitioner.4. Show cause notice for Service Tax demand.5. Declaration of respondent as Sick Industrial Company.6. Jurisdiction of writ petition for refund claim.7. Necessity of BIFR's leave for initiating legal proceedings.8. Validity of claim in absence of contract clause for Service Tax payment.Analysis:1. The petitioner filed a writ petition seeking a Writ of Certiorarified Mandamus to obtain payment release of Rs. 67 lakhs for executing cable laying works. The contract was between the respondent and BSNL, and the petitioner was a subcontractor without a direct contract regarding Service Tax payment or reimbursement.2. The petitioner highlighted the Service Tax liability on cable laying works carried out for the respondent as per the Finance Act, 2005. The petitioner had been remitting Service Tax to the third respondent but had not been reimbursed by the respondent for the same.3. A show cause notice was issued to the respondent for Service Tax on activities including trenching and laying of telephone cables. The petitioner claimed that despite paying the Service Tax, reimbursement was pending from the respondent.4. The respondent was declared a Sick Industrial Company under the Sick Industrial Companies (Special Provisions) Act 1985. The respondent contended that no legal proceedings could be initiated against them without BIFR's permission.5. The judgment cited by the petitioner emphasized the High Court's power to order payment of money in writ proceedings for enforcement of statutory functions of the state or its officers. However, the court noted that the petitioner did not mention obtaining BIFR's leave for filing the writ petition.6. The court found that the claim of Rs. 67 lakhs by the petitioner, not being a direct party to the contract with BSNL, could not be entertained under Article 226. Without a contract clause for Service Tax payment, the issue was deemed fit for resolution in a civil court rather than through a writ petition.7. Consequently, the court dismissed the writ petition as devoid of merits, suggesting the petitioner file a civil suit against the respondent for claiming the amount. The judgment cited by the petitioner was deemed inapplicable, and the court emphasized the need for a contractual basis to address the Service Tax reimbursement issue effectively.