Contractual service tax adjustment turned on Article 265 and the tender-based rate benchmark, defeating the refund claim.

Article 265 was applied to restate that tax may be levied or collected only under authority of law. The contractual terms between the parties governed adjustment of service tax, requiring reimbursement if the tax rate increased and refund if it decreased, with the relevant benchmark being the rate prevailing on the last due date for receipt of tenders. The petitioners failed to show that the prevailing rate supported their claim, so the contract-controlled tax adjustment and no relief was available on the reimbursement or refund claim.

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Issues: Whether the petitioners were entitled to relief against the contractual adjustment of service tax and the consequent reimbursement or refund claim, and whether the writ petitions were liable to be dismissed in view of the judgment rendered the same day in the connected matter.

Analysis: Article 265 of the Constitution of India was applied to hold that tax can be levied or collected only under authority of law. The contractual terms governing the parties required refund of any decrease in the service tax rate and reimbursement of any increase in the tax rate, with reference to the rate prevailing on the last due date for receipt of tenders. The petitioners were unable to establish that the relevant prevailing rate was the one asserted by them, and the contractual stipulation controlled the tax adjustment between the parties.

Conclusion: The petitioners were not entitled to relief, and the writ petitions were dismissed.

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