TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 1292
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....ary, violative of the doctrine of promissory estoppel and contrary to Article 14 of the Constitution of India; (b) For issuance of an appropriate writ, order or direction, declaring that being satisfied and in view of introduction of GST during the continuance of the ongoing Contract, the liability to pay GST shall be that of the Respondents in terms of the amended work order incorporating the impact of GST and as such, the Respondents be directed to forthwith pay withheld amount from various bills of the petitioner since September, 2019. (c) For issuance of an appropriate writ, order or direction, holding and declaring that in view of the amended Work Order incorporating the impact of GST, read with the Bid document, the Petitioner is entitled for impact of GST along with interest from September, 2019 onwards, since the GST liability has been discharged by the Petitioner out of its own pocket and can be viewed on the State GST Portal which has been illegally withheld by the Respondents from September, 2019 onwards, thus, doubly penalizing the petitioner i.e., on one hand, the petitioner is regularly depositing the GST amount as a statutory requirement and on other hand, the Re....
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....e may be, in accordance with GCC Clause 31 (Changes in Laws and Regulations) hereof. In the event of introduction of GST in the course of performance of contract, PIA shall examine its impact on the affected transactions under the contract in totality, for equitable adjustment in the contract price, if required. The contractor shall furnish the relevant details/documents for this purpose, as may be required by PIA. However, these adjustments would be restricted to direct transactions between the Employer and the Contractor for which the taxes and duties are reimbursable by the Employer as per the Contract. These adjustments shall not be applicable on procurement of raw materials, intermediary components etc by the Contractor and also not applicable on the bought out items dispatched directly from sub-vendor's works to site. In respect of raw materials, intermediary components etc and bought out items, neither the Employer nor the Contractor shall be entitled to any claim arising due to increase or decrease in the rate of Tax, introduction of a new Tax or abolition of an existing Tax in the course of the performance of the Contract." After the pre-bid meeting was carried out ....
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....lations) hereof. In the event of introduction of GST in the course of performance of contract, PIA shall examine its impact on the affected transactions under the contract in totality, for equitable adjustment in the contract price, if required. The contractor shall furnish the relevant details/documents for this purpose, as may be required by PIA." A perusal of amended Clause 10.7 made it clear that the contractors would be entitled to equitable adjustment on account of introduction of GST in totality in connection with the contract. In the same very clause, it was mentioned that the Project Implementing Agency shall examine the impact and will accordingly reimburse the same to the contractor. As a consequence of the pre-bid meeting, the work orders were issued vide different Letter of Awards and in the Letter of Award, Clause 28 of the Letter of Award of different dates read as under: "If any rates of Tax are increased or decreased, a new tax is introduced, an existing, tax is abolished, or any change in interpretation or application of any ta occurs in the course of the performance of the contract, which was or will be assessed on the contractor in connection with performan....
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....use 28 of the Letter of Award 09-06-2017, the Respondent No. 2 has ventilated its intentions in writing to omit the following portions of Original Clause 10.7 of NIT which is now sought to brought back from the back door by the Respondent No. 2 as appears from the Counter Affidavit which is contrary to the intentions of the parties on the day of entering into contract. Learned sr. counsel further submits that the stand taken or interpretation now advanced by the respondent No. 2 in the Counter Affidavit amounts to omitting and deleting the Pre-Bid Clarification dated 06-09-2016 and Clause 28 of the Letter of Award dated 09-06-2017 which are treated as "Integral Part" of the Contract Agreement dated 19-06-2017. From the Pre-bid Clarification dated 06-09-2016 and the Clause 28 of Letter of Award dated 09-06-2017 the intentions of the parties are clear that in the event of introduction of GST in the course of performance of contract, PIA shall examine its impact on the affected transactions under the contract in totality for equitable adjustment in the contract price, if required. The Respondent issued four amendment/freezing of BOQs on 10-08-2018, 27-11-2018, 30-04-2019 and 03-02-2....
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....g letters to Respondent for release of withheld amount, which are referred to herein below: i) TECH/JBVNL-DHAN-CHATRA/2019/2505 dated 21-11-2019 ii) TECH/JBVNL-DHAN-CHATRA/2020/2676 dated 18-01-2020 iii) TECH/JBVNL-DHAN&CHATRA/2020/3263 dated 07-12-2020 iv) TECH/JBVNL-DHAN-CHATRA/2021/3384A dated 10-08-2021 v) TECH/JBVNL-DHAN&CHATRA/2021/ 3384G dated 29-10-2021 vi) TECH/JBVNL-DHAN.2022/5030 dated 22-08-2022 Learned senior counsel lastly submits that faced with the situation, the petitioner made its claim before the respondent No. 2 Since, the claim of the petitioner was kept dormant, the petitioner approached this Court invoking its writ jurisdiction under Article 226 of the Constitution of India. 7. In essences, learned senior counsel summarized his argument as follows: (a) As per the agreed terms the respondent No. 2 is bound/obliged to pay/reimburse the impact of GST on the affected transactions in totality by equitable adjustment in the contract price, (b) There is no conflict between different clauses of the contract as accepted by the respondent No. 2 [under para 10(i) of counter affidavit] hence, the "order of precedence" under clause 1.2 of contract agreem....
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.... concluded his argument by submitting that the Petitioner in no case is entitled for differential cost of GST as it is applicable only on direct item subject to furnishing of relevant documents. 9. Having heard learned counsel for the parties and after perusing the averments made in the respective affidavits and the documents annexed therein and also after analysing different clauses of tender agreement especially original Clause 10.7 of NIT and the subsequent amendment and also the pre-bid clarification dated 06.09.2016; it appears that as per the agreed terms of the contract, the respondent No. 2 is legally bound to pay/reimburse the "impact of GST" on all "affected transactions" under the contract "in totality" for "equitable adjustment" in the contact price. The words "impact of GST" on "affected transactions" under the contract "in totality" read in its ordinary natural sense would include all affected transactions in totality under the contract, going by the plain words. The intentions of the parties to reimburse/pay and receive the impact of GST on direct transactions and also indirect transactions (bought out items) is clear from the deletion of portions from Clause 10.7 o....
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....) which is integral part of Contract Agreement dated 19-06-2017 under Article 1.1 which uses the word "IT IS AGREED THAT" which shows consensus ad idem between the parties and intentions of the parties on the date of entering into the Contract Agreement. It is evident from record that the intentions of the parties are clear from a plain reading of the amended Clause 10.7 of GCC vis a vis original Clause 10.7 of GCC. The amended Clause 10.7 read in the context of Original/unamended Clause 10.7. With the said Pre-Bid Clarification dated 06-09-2016 and Clause 28 of the Letter of Award 09-06-2017, the respondent No. 2 has ventilated its intentions in writing to omit the following portions of Original Clause 10.7 of NIT which is now sought to brought back from the back door by the respondent No. 2 as appears from the Counter Affidavit which is contrary to the intentions of the parties on the day of entering into contract. The stand taken or interpretation now advanced by the Respondent No. 2 in the Counter Affidavit amounts to omitting and deleting the Pre-Bid Clarification dated 06-09-2016 and Clause 28 of the Letter of Award dated 09-06-2017 which are treated as "Integral Part" of t....
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....to be gathered only from the words used therein. In a case where agreement is executed by the expert in the field it cannot be held that the intention of the parties was different from the language used therein. 12. It is further apparent that the contract in the instant case is supply contract, are for sale of goods, hence, in any case, in terms of Section 64 A of the Sale of Goods Act, 1930 the petitioner is entitled to GST impact on the indirect transactions. Section 64A, Sale of Goods Act, makes it clear that the respondents are under obligation to pay the taxes, duties and levies in the event of change in law and the seller (in the present case, the Petitioner) has a right to add such additional amount of tax to the contract price. In terms of Section 64A(2)(b) of Sale of Goods Act, the Petitioner, is entitled to recover from the respondents the tax withheld on account of imposition of GST. Thus, the actions of the respondent No. 2 violates principles of promissory estoppels and contrary to the doctrine of legitimate expectations of the petitioner and hence, offends Article 14 of the Constitution of India. The petitioners having shifted their position in view of the pre-bid ....
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....icle 1.2 of the Contract Agreement dated 19-06-2017 provides the "Order of Precedence (Reference to GCC Clause 2)" which reads as follows; Article 1. Contract Documents 1.1 Contract Documents(Reference GCC Clause 2.2) The following documents shall constitute the Contract between the Employer and the Contractor, and each shall be read and construed as an integral part of the Contract. Volume - A 1. The Contract Agreement and the Appendices thereto. 2. Invitation to bids. NIT No.110/PR/JBVNL/16-17 3. Pre-Bid Clarification dated 09-06-2016 4. Letter of Intent No.990/RE dated 09-05-2017 5. ..... 6. ..... 7. Letter of Award, LOA No.60/RE dated 09-06-2017 1.2 "Order of Precedence (Reference to GCC Clause 2) In the event of any ambiguity or conflict between the Contract Documents list above, the order of precedence shall be the order in which the Contract Documents are listed in Article 1.1(Contract Documents) above. In the instant case there is no ambiguity or conflict between the contract documents, hence, the order of precedence under Article 1.2 would not apply. The Respondent No. 2 under Para 10(i) of the Counter Affidavit has accepted that stipulations/docum....
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.... reported in 2011 SCC Online SC 99 (Para 38 to 41). As a matter of fact, this issue has been settled way back in the case of Kumari Shrilekha Vidyurthi Vs. State of Uttar Pradesh reported in (1991) 1 SCC 212, wherein it is held by the Hon'ble Apex Court that States Constitutional obligation co-exists with contractual obligation and State action is amenable to judicial review to determine violation of Article 14 irrespective of where it in contractual sphere or other sphere. The action of judicial review should be based not on the nature of function i.e., contractual or otherwise but public nature of the body exercising that function, State action being public in nature is open to judicial review even, if it pertains to contractual field. The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of States activity. To the extent the challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary unfair or unreasonable, the fact that the dispute also falls within the domain contractual obligation, would not relieve the State of its obligation to comply with the basic requirement of Artic....