TaxTMI 
TaxTMI 
2024 (4) TMI 851
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....ate Mrs. Debolina Sen Hirani, Advocate Mr. Akshat Vachher, Advocate Ms. Kashyapi, Advocate Ms. Abhiti Vachher, Advocate [in W.P.T. Nos. 6471/2023, 6524/2023, 6529/2023 & 160/2024] : Mr. Ajit Kumar, Sr. Advocate Ms. Tanya Singh, Advocate [in WPT Nos. 6712/2023,7060/2023,7066/2023, 7069/2023, 7074/2023, 7076/2023 &7079/2023] : Mr. Ajit Kumar, Sr. Advocate Mr. Rohitashya Roy, Advocate Mr. Vibhor Mayank, Advocate [in WPT No. 5773/2023,5291/2023, 5341/2023 & 5574/2023] : Mr. M.S. Mittal, Sr. Advocate Mr. Salona Mittal, Advocate Ms. Lavanya Gadodia, Advocate [in WPT No. 5720/2023, 5721/2023 & 5722/2023] For the Resp.-State : Mr. Rajiv Ranjan, Advocate General Mr. Ashok Kumar Yadav, Sr. S.C.-I Mr. Aditya Kumar, A.C. to Sr. S.C.-I Ms. Aparajita Chatterjee, Advocate Ms. Komal Tiwari, Advocate. For the Resp.-JBVNL : Mr. Manish Kumar, Sr. S.C. Ms. Nirupama, AC to Sr. S.C. PER, SHREE CHANDRASHEKHAR, A.C.J. In this batch of writ petitions, the petitioner-Firms are seeking reimbursement of the GST paid by them for the procurement of raw materials, intermediary components etc. and the bought-out items dispatched directly from the sub-vendors to the work site. In respect to these trans....
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....t of GST due to the fact that the Respondent No. 2 has deposited TDS on CGST and SGST @ 1% each of the Gross Value of GST invoices from the date of applicability i.e., 01.10.2018. e) For issuance of any other appropriate writ(s)/order(s)/directions(s) as Your Lordships may deem just and proper in the facts and circumstances of the case for imparting substantial justice to the Petitioner." 3. In W.P (T) Nos. 5720 of 2023, 5721 of 2023 and 5722 of 2023, Mr. M.S Mittal, the learned senior counsel advanced the arguments on behalf of M/s Anvil Cables Private Limited. W.P. (T) No. 5720 of 2023: (i) For issuance of an appropriate writ, order or direction, including a writ in the nature of declaration, declaring the action of the Respondent JBVNL in withholding amount of GST impact of Rs. 8,32,93,388.43 in respect of the Giridih Project under the Din Dayal Upadhyay Gram Jyoti Yojna while paying bills from the month of July, 2017, is wholly arbitrary, unreasonable in as much as the Respondent JBVNL was bound by the circulars issued by Rural Electrification Corporation which mandated payment of increase in contract price due to introduction of GST to the contrac....
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....and declaring that in view of the terms and conditions contained in the Bid document, the Petitioner is entitled for impact of GST along with interest from March 2016 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, 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 Respondent is withholding the GST amount from the Petitioner's tax invoice. iv. For holding and declaring that the Petitioner is entitled for reimbursement of GST amount due in view of the fact that Respondent have deposited TDS on CGST and SGST @ 1% each of gross value of GST invoice from the date of applicability i.e. from 01/09/2018. AND/OR The petitioners pray for issuance of any other appropriate writ(s), order(s), Direction(s) for which the petitioner is found legally entitled to and also for doing conscionable justice to the petitioners. 5. Mr. Rohitashya Roy, the learned counsel has appeared for M/s NCC Limited which filed W.P.(T) Nos. 5773 of 2023, 5291 of 2023, 5341 of 2023 and 5574....
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....ctrification under the Dindayal Upadhyay Gram Jyoti Yojna (in short, DDUGJY), the bids were invited by the JBVNL on different dates and the petitioner-Firms were selected for the implementation of the scheme. As per clause 10.7 and clause 31 of the GCC, any increase in the price of the indirect transactions on account of a change in the tax regime was to be borne by the Contractor as the price quoted thereon was inclusive of the taxes. The direct transactions are confined to the purchase of materials by the JBVNL directly from the petitioner-Firms whereunder the price quoted is exclusive of taxes. The other transactions labeled as indirect transactions included the bought-out items and the materials procured by the petitioner-Firms from the other vendors and sold to the JBVNL. As the transactions involved in the implementation of the rural electrification works fell under the definition of "supply" as defined under section 7(1) of the GST Act, the concerns about the differentiation made between the direct and indirect transactions were raised from time to time. The REC issued a circular on 30th June 2016 which clarified that the impact of the GST upon the contract shall be consider....
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....23 and that was dismissed observing as under: "Delay condoned. Having heard the learned senior counsel for the petitioners as also the learned senior counsel for the respondents, keeping in view the factual aspects involved in the instant case, we see no reason to interfere. However, on the larger issue relating to the question of law which has been raised, the same is left open to be considered if it arises in an appropriate fact situation. Petition(s) stand(s) disposed of along with the pending application(s), if any." 9. Mr. Ajit Kumar Sinha, the learned senior counsel appearing for the East India Udyog Limited submits that the order passed by a co-ordinate Bench of this Court in M/s Techno Electric and Engineering Company Limited was affirmed by the Hon'ble Supreme Court after an adjudication on facts and while so the findings recorded in the said case cannot be re-opened in the present proceeding. According to the learned senior counsel, this batch of the writ petitions involves identical set of facts and issues and therefore the judgment of the co-ordinate Bench in M/s Techno Electric and Engineering Company Limited shall be binding on t....
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....of its obligations under the Contract However, these adjustments would be restricted to direct transactions between the Employer and the Contractor and not on procurement of raw materials, intermediary components etc. by the Contractor for which the Employer shall be the sole judge. Notwithstanding the foregoing, such additional or reduced costs shall not be separately paid or credited if the same has already been accounted for in the price adjustment provisions where applicable, in accordance with the Appendix-2 to the Contract Agreement. " 12. Clause 31 of the GCC provides that the adjustments on account of any law, regulation, ordinance order or by-law having been enacted seven days before the bid opening date, or abrogated, or changed that subsequently affects the cost and expenses of the contract and/or the time for completion, shall be restricted to direct transactions between the Employer and the Contractor. In converse, clause 31 bars any adjustment to the Contractor on the procurement of raw materials, intermediary components etc. The unamended clause 10.7 of the GCC also referred to the increase or decrease in tax or introduction of a new tax, or the abolition of an ex....
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....rease 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." 14. The unamended clause 10.7 of the GCC contemplated the introduction of GST in the course of performance of the contract and therefore it was provided in clause 10.7 that in the event of introduction of GST in the course of performance of the contract, PIA shall examine its impact on the affected transactions under the contract in totality for equitable adjustment in the contract price, if required. Before the amendment, clause 10.7 was in sync with clause 31 and both provided that the adjustment on account of the introduction of GST in the course of performance of the contract was restricted to direct transactions between the Employer and the Contractor for which the taxes and duties were reimbursable by the Employer. This is plain reading that what is provided under clause 31 of the GCC was also incorporated under clause 10.7 which contained a restrictive covenant to the effect that the adjustments to be made on account of change in the existing tax structure shall not be applicable to the procurement of raw materials, intermediar....
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....ount any such change by addition to the Contract price or deduction therefrom, as the case 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." 17. However, the learned Advocate General contends that as regards adjustments in the contract price clause 31 of the GCC shall guide and regulate the provision under clause 10.7 even after the amendment thereto. The rule ex antecedentibus et consequentibus fit optima interpretation which means the deed must be read as a whole in order to ascertain its true meaning is of vintage origin. In "Throcmerton" [Throcmerton v. Trucey : (1585) 1 Plow. 145, 161] the Court observed that the contract as a whole has to be considered. More than a century thereafter, Lord Watson [Chamber Coillery v. Twyerould (1893) : [1915] 1 Ch. 268n., 272] said "I find nothing in this case to oust the applic....
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....ackground knowledge. The interplay between clause 31 and the amended clause 10.7 of the GCC is a question of interpretation of the contract and, we do not see any reason to differ with the reasoning of the co-ordinate Bench as to the effect of clause 31 in the amended clause 10.7 of the GCC. In "McDermott International" [McDermott International v. Burn Standard Co. Ltd. : (2006) 11 SCC 181] the Hon'ble Supreme Court held that the terms of the contract can be expressed or implied and the conduct of the parties would also be a relevant factor in the matter of construction of a contract. After the amendment in clause 10.7, the JBVNL started paying the GST impact on whole of the contract including the indirect transactions and that demonstrates its correct understanding of the effect of the amendment in clause 10.7 but without any plausible and acceptable reason it had stopped/withdrawn the GST impact on the indirect transactions; a change in the political regime or the bureaucracy should not bring a change in the understanding in law. 19. Still, the learned Advocate General endeavored to support his submission with reference to the letters dated 30th June 2016 and 5th June 2018 fro....
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....nder: If, after the date seven (07) days prior to the date of Bid Opening, any law, regulation, ordinance, order or by-law having the force of law is enacted, promulgated, abrogated or changed in India (which shall be deemed to include any change in interpretation or application by the competent authorities) that subsequently affects the costs and expenses of the Contractor and/or the Time for completion, the Contract Price shall be correspondingly increased or decreased, and/or the Time for Completion shall be reasonably adjusted to the extent that the Contractor has thereby been affected in the performance of any of its obligations under the Contract. However, these adjustments wouldd be restricted to direct transactions between the Employer and the Contractor and not on procurement of raw materials, intermediary components etc. by the Contractor for which the Employer shall be the sole Judge. Notwithstanding the foregoing, such additional or reduced costs shall not be separately paid or credited if the same has already been accounted for in the price adjustment provisions where applicable, in accordance with the Appendix-2 to the Contract Agreement. In this con....
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....ts 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. Unquote Clause No. 31.1 of 31 (change in laws and Regulations) Quote If, after the date seven (07) days prior to the date of Bid opening any law regulation, Ordinance, Order or by-law having the force of law is enacted promulgated, atrogated or changed in India (which shall be deemed to include any change in interpretation of application by the competent authorities) that subsequently affects the costs and expenses of the Contractor and/or the ....
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....act in totality for equitable adjustment in the contract price, if required". In its letter dated 5th June 2018, the REC again reiterated that in the event of the introduction of GST in the course of performance of the contract, the PIA shall examine its impact on the affected transaction under the contract in totality for equitable adjustment in the contract price, if required. Quite evidently, the word "totality" used in these letters referred to the impact of the introduction of GST on the entire contract. 23. Simply put, the effect of deletion of the latter portion in clause 10.7 of the GCC shall be that the adjustment of GST component shall no longer be restricted to direct transactions between the Employer and the Contractor. The writ Court rightly held that clause 31 of the GCC cannot be read in a manner so as to obliterate the impact of the amended clause 10.7 of the GCC. Now having thus interpreted the different clauses under the GST, we say with certainty that the entitlement of the petitioner-Firms to claim the increase in the tax liability on the indirect transactions that underwent change in the course of the working of the contract is an enforceable right under sec....
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....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 meeting and clarification, now at this stage, the licensee cannot take a U-Turn by not paying the GST impact. At this stage it is relevant to observe that as per the agreed terms, after introduction of GST, the Respondent No. 2 started paying /reimbursing amounts of GST impact on "affected transactions in totality" i.e., direct transactions between Employer and Contractor as well as indirect transactions (bought out items) which continued up to August, 2019, up till execution of 80% of the work. However, all of a sudden, without even informing the petitioner, withheld amount of GST impact while paying bills from the month of September,....
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.... 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/documents do not reveal any sort of contradiction amongst them. In fact, both the clauses are seen supporting and complementing each other, which have been just re-iterated in the REC'S Letter dated 30-06-2016. 15. With regard to the contention of the Respondents on the question of maintainability; now it is well settled that the writ in contractual matters against public authority or instrumentality or agencies of state are 'State' within the meaning of Article-12 of the Constitution of India and hence ....
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....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 Article 14. An additional contractual obligation cannot direct the claimant of the guarantee under Article 14 of the non-arbitrariness at the hands of the State in any of its action. Every State action in order to survive, must be susceptible to the vice of arbitrariness which is crux of Article 14 and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of rule of law. Satisfaction of test of non-arbitrariness in every State action is sine qua non to its va....
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....sed by the High Court it shall be the decision of the Hon'ble Supreme Court which shall be the operative order governing the rights and liabilities of the parties to the contract. When a Special Leave Petition is dismissed in limine the order passed by the High Court does not merge with the dismissal order passed by the Hon'ble Supreme Court. This seems to be the reason that even after the dismissal of the Special Leave Petition in limine the aggrieved party can move a petition for review of the order/judgment of the High Court. As indicated in "Kunhayammed" [Kunhayammed v. State of Kerala : (2000) 6 SCC 359], the Special Leave Petition filed by the State of Jharkhand was dismissed without 'leave' being granted by the Hon'ble Supreme Court and the challenge laid to the judgment in M/s. Techno Electric and Engineering Company Limited was dismissed in limine. However, what is contended on behalf of the petitioner-Firms is that in the identical set of facts there cannot be more than one decision governing the same subject-matter. 26. Aristotle said that the habit of lightly changing the laws is evil. Recently, Scarman, L.J. observed that: "Consistency is necessary to certainty - on....
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....t deciding the matter earlier but it would not be a reason to say that the decision was rendered per incuriam and liable to be ignored. The earlier judgment may seem to be not correct yet it will have the binding effect on the later Bench of coordinate jurisdiction. Easy course of saying that earlier decision was rendered per incuriam is not permissible and the matter will have to be resolved only in two ways - either to follow the earlier decision or refer the matter to a larger Bench to examine the issue, in case it is felt that earlier decision is not correct on merits. Though hardly necessary, we may however, refer to a few decisions on the above proposition." 27. Next, the learned Advocate General endeavored to classify the writ petitions in two categories; one set of writ petitions pertains to the N.I.T. floated in the year 2015 where amended clause 10.7 of the GCC was not incorporated in the Agreement. The stand of the JBVNL is that such petitioner-Firms cannot claim reimbursement of GST component over procurement of raw materials, intermediary components and bought-out items. According to the JBVNL, there is a set of seven writ petitions vide W.P (T) Nos. 5720 of 2023, 5....
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....t paid by the Contractor on indirect transactions is reimbursable to the Contractor. Mr. Rohitashya Roy, the learned counsel who appears for M/s NCC Limited adopted the arguments advanced by the learned senior counsels appearing for the other petitioner-Firms. 30. This is a settled law that the State and its instrumentalities are required to demonstrate fair play in action. In "ABL International Ltd. and Another" [ABL International Ltd. and Another v. Export Credit Guarantee Corporation of India Ltd. and Others : (2004) 3 SCC 553] the Hon'ble Supreme Court observed that even in contractual matters, the State and its instrumentalities are required to follow the equality clause under Article 14 of the Constitution of India. The petitioner-Firms were agitating for their right to refund/reimbursement for long. They have brought on record the copies of their representations made to the JBVNL, and the response thereto by the JBVNL was that the matter is pending litigation. On the point of similarity of facts with M/s Techno Electric and Engineering Company Limited, suffice it would be to record that the NITs, GCCs, LOAs, and the GST clause introduced in the LOAs are the same. A pre-bi....