TaxTMI 
TaxTMI 
2023 (11) TMI 778
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....included in the schedule of the contract. It is argued that the rates were quoted by the petitioner and the other bidders as per the rates of taxes/cess payable on the date of the said contract. The schedules of rates were also given accordingly. 2. Subsequently, with the introduction of the Central Goods and Services Tax Act, 2017 (for short, "the GST Act"), the entire tax regime changed. Hence, the petitioner was compelled to bear huge additional taxes which was beyond the contemplation of the contract between the parties and/or the tender. 3. The writ petitions have been filed for refund of the payments made by way of Goods and Services Tax (GST) by the petitioners in respect of the different work orders. 4. Learned counsel for the petitioner argues that the contract is a commercial document between the parties and must be interpreted in a manner to give efficacy to it rather than to invalidate it. The courts, it is contended, have to adopt a pragmatic, and not a technical, approach while interpreting or construing clauses of the contract. 5. In support of such contention, learned counsel cites Nabha Power Limited (NPL) v. Punjab State Power Corporation Limited (PSPCL) and a....
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....indirect taxes. 14. It is argued that the GST Act merely replaces the other indirect taxes previously operative such as Sales Tax, Excise Duty, VAT, etc. Thus, there has been no effective alteration in the contract between the parties, which is unambiguous in its terms, merely by introduction of the GST regime. 15. Learned counsel cites Bipson Surgical (India) (P) Ltd. v. State of Gujarat, reported at 2018 SCC OnLine Guj 4832, where a Division Bench of the Gujarat High Court observed that in Rashtriya Ispat Nigam Limited, the Supreme Court had observed that the statutory provision can be of no relevance to determine the rights and liabilities between the parties as agreed in contract between the two of them. It is accepted and conventional in commercial practice to shift such liability to the contractor. If a change of taxation was to be read as meaning that the contractor would be liable only to honour his own tax liabilities and not the liabilities arising out of the obligations under the contract, there was no need to make such a provision in a bilateral commercial document. 16. It is argued that the petitioner is, thus, liable to pay taxes under the GST Regime as per the sta....
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....ven to it. No outside aid should be sought unless the meaning is ambiguous. In the event the interpretation argued by the petitioners is to be accepted in the present case, the terms of the contract would be altered and re-written, which has been deprecated in Polymat India (P) Ltd. (supra), also cited by the petitioner. 23. The relevant clause in the contract contemplates that the contractor/bidder is to quote its rate accordingly after considering "all these charges", thus referring to the taxes mentioned therein. Such taxes were Income Tax, VAT, Sales Tax, Royalti, Construction Workers' Welfare Cess and "similar other statutory levy/Cess". 24. The argument of the petitioner that a new tax regime has been introduced, imposing additional taxes, is self-defeating. The relevant clause clearly indicates that all indirect taxes are also to be paid by the petitioner. By way of example, VAT, Sales Tax, etc., have been mentioned and similar other statutory levy has also been included in the contract, to be borne by the contractor. 25. The GST Act has merely subsumed the indirect taxes payable by a supplier for the entire service chain and has not introduced any additional set of taxes....
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....original contract and the tender document. The petitioner was clearly to bear VAT, Sales Tax and similar other statutory levy, including all indirect taxes payable for the service chain. The expression "similar other statutory levy/cess" in the relevant clause of the contracts makes it abundantly clear. 33. The GST regime has only introduced a common taxation for the entire supply chain which subsumes and does not add to the previous taxes payable on such count. Hence, the argument that the petitioner is saddled with a new liability beyond the contract is untenable in law and in fact. 34. In view of the above discussions, it is the petitioner who is liable to pay the GST. 35. The petitioner also cites judgments, in particular Sime Darby Engineering SDN. BHD. (supra), to indicate that policy decision cannot change a contractual clause. In the present case, however, there has been no change to the contractual clause. Read as it is, the petitioner is liable under the clause to bear all taxes which have been subsumed by the GST Act. Rather, if the petitioner's interpretation is to be accepted, the petitioner would be entirely absolved of all taxes, which would be tantamount to delet....