TaxTMI 
TaxTMI 
2019 (6) TMI 1148
X X X X Extracts X X X X
X X X X Extracts X X X X
....stake it had reimbursed the service tax. Claim before the Arbitrator was praying that Award be passed in favour of the Appellant for the amount of service tax paid by the Appellant to the Respondent who had deposited the service tax with the Income Tax Department. Reliance was placed on Clause XII, Para (i), which was identical in all the contracts. The Clause reads: "(i) All the taxes/levies/fees/charges payable to any Government body/Local body shall be paid by the contractor and no claim what so ever shall be against the Corporation on this account." 3. Overruling technical objection raised by the contractor, the learned Arbitrator has held that the Appellant, as the service recipient, was liable to pay the service tax and that as per the clause in question, the Respondent had not taken over the liability to bear the service tax. 4. In the impugned decision, the learned Single Judge has held that the construction of the clause of the contract by the learned Arbitrator fell within the domain of the Arbitrator and thus the decision could not be challenged. 5. In the decision reported as (2007) 7 SCC 527 All India Federation of Tax Practitioners & Ors. Vs. UOI & Ors., the Supr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Assessee, the liability arose out of the services rendered by the Respondent to the Appellant, and that too prior to this amendment when the liability was on the service provider. The provisions concerning service tax are relevant only as between the Appellant as an Assessee under the statute and the tax authorities. This statutory provision can be of no relevance to determine the rights and liabilities between the Appellant and the Respondent as agreed in the contract between two of them. There was nothing in law to prevent the Appellant from entering into an agreement with the Respondent handling contractor that the burden of any tax arising out of obligations of the Respondent under the contract would be borne by the Respondent." 7. Section 83 of the Finance Act, 2007 made certain provisions of the Central Excise Act, 1944 as in force from time to time applicable in relation to Service Tax as they apply in relation to a duty of excise. The Section reads as under: "83. Application of certain provisions of Act 1 of 1944: The provisions of the following section of the Central Excise Act, 1944 ( 1 of 1944), as in force from time to time, shall apply, so far as may be, in re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion, also takes care of non-applicability of the future amendments, as it provides for applicability of the relevant Sections of the Central Excise Act 1944 as in force from time to time. Thus the future amendments in the provisions of the Central Excise Act would also be applicable mutatis mutandis to Service Tax. As noted above, Section 12B of the Central Excise Act, which applies to the Service Tax raises a presumption that the incidence of duty has been passed to the buyer unless the contrary is proved. Thus in the absence of a contract for the liability of a service tax, it will be presumed that the same has been passed over to the service recipient. 13. Based on the Rule of Equity, similar provision exists in the Sales of Goods Act, 1930, that is, Section 64A. The Supreme Court in the decision reported as 2007 (8) SCC 466 Numaligarh Refinery Ltd. Vs. Daelim Industries Co. Ltd., held that whether a party is entitled to be paid such a tax or increase has to be ascertained from the intention of the parties to the contract and unless a different intention appears from the terms of the contract, in the case of imposition or increase in the tax after the making of a contract, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct Act subject to one exception. Noting that the duties under the Central Excise and Customs are indirect taxes and supposed to be and are permitted to be passed on to the buyers, it was held: "80. For the purpose of this discussion, we take the situation arising from the declaration of invalidity of a provision of the Act under which duty his been paid or collected, as the bases, inasmuch as that is the only situation surviving in view of our holding on (I) and (II). In such cases the claim for refund is maintainable by virtue of the declaration contained in Article 265 as also under Section 72 of the Contract Act as explained hereinbefore subject, to one exception : where a person approaches the High Court or Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be re-opened on the basis of the decision on another person's case; this is the ratio of the opinion of Hidayatullah, CJ. In Tilokchand Motichand and we respectfully agree with it. In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he burden of duty; the manufacturer who is the claimant has certainly not borne the duty notwithstanding the fact that it is he who has paid the duty. Where such a claim is made, it would be wholly permissible for the court to call upon the petitioner/plaintiff to establish that he has not passed on the burden of duty to a third party and to deny the relief of refund if he is not able to establish the same, as has been done by this Court in I.T.C. In this connection, it is necessary to remember that whether the burden of the duty has been passed on to a third party is a matter within the exclusive knowledge of the manufacturer. He has the relevant evidence - best evidence - in his possession. Nobody else can be reasonably called upon to prove that fact. Since the manufacturer is claiming the refund and also because the fact of passing on the burden of duty is within his special and exclusive knowledge, it is for him to allege and establish that he has not passed on the duty to a third party. This is the requirement which flows from the fact that Section 72 is an equitable provision and that it incorporates a rule of equity. This requirement flows not only because Section 72 incorpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the interpretation of a contract. 18. The House of Lords in the decision reported as [1998] 1 WLR 896 Investors Compensation Scheme Ltd. vs. West Bromwich Building Society summarized the principle of interpretation of contractual documents as under: "(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilber force as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law m....