Contractual service tax reimbursement claim barred in writ jurisdiction; civil suit was the proper remedy

A writ claim for reimbursement of service tax arising from a subcontract was held unsuitable for Article 226 jurisdiction because no express contractual term required reimbursement and the dispute was essentially contractual and monetary. The respondent company had also been declared a sick industrial company, so proceedings against it attracted the protection of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, and no averment showed prior leave had been obtained. On that basis, the matter was not fit for writ adjudication and the proper remedy was a civil suit.

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Issues: Whether the writ petition seeking reimbursement of service tax from the first respondent was maintainable under Article 226 of the Constitution of India in view of the contract dispute and the protection available to the respondent company under the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The claim arose out of a subcontractual arrangement and there was no express contractual term obligating the first respondent to reimburse service tax. The Court also noted that the first respondent had been declared a sick industrial company and that proceedings against it required prior permission in terms of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. In the absence of any averment that such leave had been obtained, and since the dispute was essentially contractual and monetary in nature, the matter was not fit for adjudication in writ jurisdiction. The appropriate remedy was a civil suit.

Conclusion: The writ petition was not maintainable and the claim for reimbursement could not be entertained under Article 226 of the Constitution of India.

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