TaxTMI 
TaxTMI 
2014 (7) TMI 665
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....ors. Since common issues are involved in all these writ petitions, they were heard together and are being disposed of by this common order. 2. The petitioners are engaged in providing services of "hiring of HEMM (Heavy Earth-Moving Machinery) for removal of Overburden, extraction and transportation of coal". The respondent-BCCL is a public limited company, as public sector undertaking and engaged in mining of coal and other mining activities. The BCCL floated various notices inviting tender (in short, "NIT") from time to time for removal of overburden, extraction and transportation of coal from various mines of the company within the district of Dhanbad in the State of Jharkhand. The petitioners participated in these NITs and their bids were accepted. Accordingly, the work order was given to the petitioners for the said work on different rates fixed with respect to different areas of operation. The petitioners were awarded different works on different dates in 2009 in various mines/various areas of respondent-company/BCCL. The details of the work order/contract agreement are as under: Case No. Name of company Name of work Work amount W.P.T. No. 254 of 2013 M....
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....lared that only to the extent of cash remittance "service tax reimbursement will be made to the contractor for net service tax payment (calculated service tax on the value of the work less paid through CENVAT)". The said corrigendum/amendment dated March 2, 2012 was communicated to all concerned by letter dated March 2, 2012 and on the basis of said amendment/corrigendum the respondent-BCCL withheld payments to the contractor/petitioner. On March 13, 2012 the petitioner made a request to the BCCL to release their withheld running bills/invoices along with service tax amount. In response to the said letter, respondent-BCCL sent a letter dated March 16, 2012 annexing therewith a copy of the aforesaid corrigendum/amendment dated March 2, 2012. Being aggrieved by the issuance of the said corrigendum/amendment dated March 2, 2012 and also the said letter dated March 16, 2012, the petitioner (M/s. Dhansar Engineering Company Pvt. Ltd) filed a writ petition, being W.P. (T) No. 1548 of 2012. However, during pendency of the writ petition, by letter dated April 18, 2012, BCCL intimated to all concerned that the said corrigendum/amendment dated March 2, 2012 and said letter dated March 16, 20....
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....AT credit. Accordingly, as approved by the Functional Directors of the company by way of corrigendum, the modification was made in all the contracts, present and future, to the extent that service tax reimbursement will be made to the contractor for net service tax payment (calculated service tax on the value of the work less paid through CENVAT). According to the respondent-BCCL, the reimbursement of the service tax to the service provider would be governed by the contractual terms between the service provider/petitioner and the service recipient and not as per the provisions contained in the Finance Act, 1994 and CENVAT Credit Rules, 2004 and BCCL is fully justified in deciding to recover the same from the contractor. 8. We have heard Mr. B. Poddar, senior counsel appearing for the petitioner along with instructing counsel Mr. Nitin Kumar Pasari and also heard Mr. Anoop Kumar Mehta, learned counsel appearing for the respondentBCCL. 9. The impugned corrigendum/amendment is challenged mainly on the following grounds: (i) BCCL entered into a contract mentioning therein clause 11(vii) that service tax will be reimbursed by BCCL to the petitioner-cont....
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.... considered the rival contentions of learned counsel for the parties and perused the materials on record. 12. The respondent-BCCL entered into agreements with the petitioners/ contractors for execution of work of hiring of HEMM for removal of overburden, extraction and transportation of coal with fire fighting from various section/areas of BCCL. As per the terms and conditions of the agreement, if service tax is legally payable by the tenderer in relation to the contract, the same is to be reimbursed by BCCL on production of documentary evidence having made such payment. Reimbursement of the service tax to the writ petitioners/service providers are governed by the terms and conditions of the contract. In terms of clause 11(vii), the petitioners are eligible for reimbursement of the service tax legally payable by them. 13. The relevant clause 11(vii) of the contract agreement and clause 13 of the work order reads as under: "Clause 11(vii) of the contract agreement: 11(vii). All duties, taxes and other levies payable by the contractor under the contract or for any other cause as applicable on the last date of submission of....
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....P. (T) No. 1548 of 2012) BCCL referred to the observation of Chief Technical Examiner (CTE) of Central Vigilance Commission (CVC) stating that "as per this clause, the contractor was to be reimbursed only for the payment made by him for service tax. Contractor submitted their bills for reimbursement of service tax including contracts of other organization in which similar work of transportation contracts were included. In this lump sum CENVAT was claimed in which the service tax was calculated at 10.3 per cent. of the payment received and from this amount CENVAT credit was deducted and the net amount was shown as paid to the authority through e-payment. Department is reimbursing the total 10.3 per cent. as service tax whereas only the net payment made by the contractor was to be reimbursed. Till date Rs. 4.81 crore were reimbursed to the contractor. If the proportionate payment made to Service Tax Department is calculated considering proportionate CENVAT credit, contractor should have been reimbursed only Rs. 2.12 crores. Thus Rs. 2.6 crore were paid extra. Action taken sincluding recovery made may be intimated". 16. The Functional Directors considered the same and in order to h....
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....ce Act, 1994 and the CENVAT Credit Rules, 2004. 18. The learned senior counsel appearing for the petitioners contended that the decision taken by the Functional Directors to incorporate corrigendum/ amendment to the contract clause and terms of the clause in respect of service tax is unilateral and arbitrary and in conflict with the CENVAT Credit Rules. It is further contended that clause 11(vii) provides for reimbursement of service tax paid in its entirety and clause 11(vii) nowhere provides for reimbursement the service tax amount paid only in cash or by cheque or through e-payment and excludes the payments made by utilization of CENVAT credit paid on the inputs materials, credit of which is taken under rule 3(1) of the CENVAT Credit Rules. Learned senior counsel further contended that in the garb of corrigendum/amendment, there cannot be a unilateral amendment of an existing contract without the consent of the other party. 19. There is no force in the contention of learned senior counsel for the petitioners that by virtue of corrigendum/amendment to clause in respect of service tax, the contract agreement for different tenders was unilaterally altered. The corrigendum/ame....
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....of service tax on any input service. But the question is whether the petitioners are entitled to claim CENVAT credit in relation to the work order/contract agreement with BCCL and claim reimbursement of service tax paid through CENVAT credit. 22. As pointed out earlier, clause 11(vii) of the general terms and conditions of the tender document stipulates that all duties, taxes and levies are included in the total bid price/quoted rate of the contractor. Thus as per clause 11(vii) the excise duty involved in purchase of equipments, spares, etc., required for the work is included in the rate/price quoted by the contractor, i.e., total excise duty paid by the contractor is being paid to the contractor by BCCL through its bills against the executed quantity of work. Because BCCL is paying whole excise duty to the contractor through bills, the contractor is not entitled to get payment against the same that is, the paid excise duty again and hence, the contractor is not liable for reimbursement of service tax paid through CENVAT credit, which is a part of excise duty. It was therefore clarified through corrigendum that the contractor should be reimbursed the service tax only to the ext....
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.... questions of fact. 26. Relying on the decision of the honourable Supreme Court in ABL Inter-27 national Ltd. v. Export Credit Guarantee Corporation of India Ltd. reported in [2004] 118 Comp Cas 213 (SC); [2004] 3 SCC 553, the learned senior counsel for the petitioner has contended that merely because some disputed questions of fact arise for consideration, the same cannot be a ground to refuse to entertain the writ petition in all cases as a matter of rule. The learned senior counsel has contended that the stand taken by the respondent is contrary to the provision of CENVAT Credit Rules, 2004 and thus, the dispute sought to be raised by the respondent is frivolous. The learned senior counsel for the petitioner would contend that what is challenged in the present proceeding by the petitioner is the arbitrary action by the respondents and thus, the petitioner has rightly approached this court by filing the writ petition. 27. In ABL International Ltd. [2004] 118 Comp Cas 213 (SC); [2004] 3 SCC 553, the honourable Supreme Court after taking note of the previous judgments of the court has held thus (page 229 in 118 Comp Cas): "27. From the above discus....
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....ct, the same will be reimbursed by the BCCL on production of the documentary evidence of having made such payments. By the corrigendum, it has been provided that service tax reimbursement will be made to the contractor on production of original challan having made cash remittance of such service tax to the service tax authorities. Admittedly, the service tax liability is of the contractor and under the conditions of the contract the BCCL has agreed to reimburse the amount of service tax so paid by the contractor by cash remittance. In this view of the matter, the BCCL cannot be faulted for insisting on production of original challan evidencing payment of service tax by cash remittance and the said act of BCCL cannot be said to be arbitrary so as to entertain the writ petition. We have already held that the corrigendum/amendment issued on March 2, 2012 is only clarificatory. 30. It has also been held by the honourable Supreme Court that normally the High Court will not issue writ to the exclusion of other available remedies unless the action of the State or its instrumentality is arbitrary and unreasonable. Clause 12 of the conditions of contract provides for "settlement of dispu....