All-inclusive contract rates bar unilateral deduction for alleged service tax, and writ relief can secure release of wrongfully withheld sums.

Where a contract fixed an all-inclusive rate and expressly included service tax, labour cess and other components, the respondent could not unilaterally reduce the agreed consideration on the premise that service tax was later found not payable. The Court held that an internal audit objection could not override the contract, and the withholding of amounts deducted from the bills was illegal. It further held that writ relief was maintainable because the dispute turned on admitted contractual terms and the retention of money was without authority of law; the availability of a civil suit did not bar relief under Article 226. The pending amounts were directed to be released.

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Issues: (i) Whether the respondent could deduct amounts from the agreed contractual consideration on the premise that service tax was included and later found not payable. (ii) Whether the writ petition was maintainable for release of the amounts withheld on that premise.

Issue (i): Whether the respondent could deduct amounts from the agreed contractual consideration on the premise that service tax was included and later found not payable.

Analysis: The contract fixed the rate at a single all-inclusive amount per vehicle per day and expressly stated that the rate included service tax, labour cess and other components. Escalation was confined only to fuel and minimum wages. There was no contractual basis to vary the agreed rate on account of service tax, nor any stipulation linking payment to any separate service tax component. The subsequent conduct of the parties also showed that the invoices were raised and paid without any separate service tax deduction for a substantial period. An internal audit objection could not override the clear terms of the agreement or justify unilateral reduction of the negotiated rate.

Conclusion: The deduction on the footing of non-payment of service tax was unjustified and the withholding was illegal.

Issue (ii): Whether the writ petition was maintainable for release of the amounts withheld on that premise.

Analysis: Though a writ petition for mere recovery of money is not ordinarily entertained, the Court may grant consequential monetary relief where the facts are not in dispute and the retention of money is without authority of law. Here, the controversy turned on the admitted contract terms and the absence of any legal basis for withholding amounts on a non-existent service tax liability. In such circumstances, the availability of a civil suit did not bar exercise of writ jurisdiction.

Conclusion: The writ petition was maintainable and relief could be granted under Article 226.

Final Conclusion: The respondent was directed to release the pending amounts deducted from the petitioner's bills on the ground of service tax, and the writ petition was allowed.

Ratio Decidendi: Where a contractual rate is fixed as all-inclusive and the facts show no lawful basis for deduction, the State or its instrumentality cannot unilaterally withhold payment on an asserted tax component; writ relief for release of money is maintainable when retention is without authority of law.

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