TaxTMI 
TaxTMI 
2025 (1) TMI 295
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.... Article 14, 265 and 300A of the Constitution of India. (b) issue a writ of certiorari or a writ or order in the nature of certiorari to call for and examine the records of the proceedings before the Respondent No. 1, and quash and set aside the Impugned Notice dated 11.08.2022 issued by the Respondent No. 1; (c) issue a writ of mandamus or a writ in the nature of mandamus directing the Respondent No. 1 and 2 to - (i) withdraw the Impugned Notice dated 11.08.2022, as being issued without jurisdiction, without authority of law, illegal, unsustainable and void ab initio; and (ii) not act on or In consequence of the Impugned Notice dated 11.08.2022. (d) issue a writ of Prohibition or a writ in the nature of prohibition directing Respondent No. 1 & 2 not to initiate or pursue any proceedings in consequence of the Impugned Notice dated 11.08.2022. (e) Pending the hearing and final disposal of this Petition - (i) stay the operation of the Impugned Notice dated 11.08.2022 issued by the Respondent No.1; (ii) direct the Respondents not to act or in consequence of the Impugned Notice dated 11.08.2022; and (iii) ....
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....med that the said amount is „not liquidated damages' and whereas on both of these mutually exclusive grounds, it is claimed by M/s. DAMEPL in those replies that no Service Tax was leviable. To understand these terms, we shall expound the commercial meaning thereof: ► Under the Indian Contract Act, the word 'damages' is understood as compensation under a contract that is paid by the defaulting party to the non-defaulting party. This compensation is awarded to the non-defaulting party to compensate for actionable wrongs of the former. Under a contract, the compensation awarded is categorized as liquidated or unliquidated damages awarded as per the terms governing the contract. ► Under a contract, the parties may agree to pay a certain sum upon breach of the terms of the contract, which scenario appears to be governed by Section 74 of the lndian Contract Act, 1872, When the agreement between the parties stipulates the sum payable for non-performance, the damages hence paid are known as 'liquidated damages'. Unliquidatcd damages are awarded by the courts or arbitral tribunals after assessing the loss or injury caused to the party suff....
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....39; purportedly to "the services of transportation of passengers, with or without accompanied belongings, by metro rail", which would not have been chargeable to Service Tax under Section 66B of the FA, 1994 w.e.f. 01.07.2012 in the hands of M/s. DAMEPL (in the capacity of the Concessionaire entitled to operate the metro line in terms of sub-Article 3.1 and Article 6 of the Concession Contract) inasmuch as these latter services were covered under Section 66D(o)(iii) ibid under "negative list of services' not chargeable to Service Tax. The said contention appears unacceptable in that the consideration that would have accrued from the passengers for the services of transportation provided to them by M/s. DAMEPL is not being paid for in this case by M/s. DMRC under the Termination Payment. By no stretch of imagination, the purpose of the termination payment could be equated to the service of transportation of passengers and from the factual matrix, it appears that the said payment is consideration towards 'the obligation of M/s. DAMEPL to tolerate the breach of contract by DMRC' by DMRC's not achieving the agreed-upon efficiency bar in their works and in effect, causin....
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.... DAMEPL, except that they have claimed it to be exempt as being purportedly covered under (i) Section 65(105)(zzzza) of the erstwhile FA, 1994 prior to 01.07.2012, relating to 'the works contract service' on account of which the Termination payment was accrued to M/s. DAMEPL or (ii) Section 66D(o) of the FA, l994 w.e.f.01.07.2012 insofar as the future revenue from passenger transportation by metro rail was to accrue to M/s. DAMEPL. As discussed hereinabove, the contentions of M/s. DAMEPL as to these exemptions appear wholly unsustainable inasmuch the 'termination payment' entails an entirely different cause of action and an altogether different set of 'service' which is defined under Section 66E(e) of the FA, 1994. It appears from the given set of circumstances that M/s. DAMEPL had agreed to the obligation to tolerate the termination of the contract compelled by the breach in performance or the Material adverse effect caused by DMRC, in return for the compensation of an amount of Rs.2782.33 crores. 4.8 It may not be out of place to discuss the Circular No.178/10/2022-GST, dated 03.08.2022 issued by the CBIC on the subject matter of "GST Applicabilit....
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....so appears that each operative clause of a contract which is agreed to be executed between a 'promisor' and 'promisee' is an express agreement by itself though may collectively referred to as "the Concession Contract" in the instant case. In the instant case, sub-Article 29.5 dealing with 'Termination for DMRC event of default' appears to be a separate contract unto itself' though the determination of 'the fact of default' and the modality of 'termination payment' may have been made dependent on terms specified elsewhere in that contract. It thus appears that the 'termination payment' does not merely restitute M/s. DAMEPL for the capital investments in the project but also represents consideration for 'toleration of the termination of the contract arising out of the DMRC default' itself and thus, is consideration for the service provided by M/s. DAMEPL to DMRC. The Concession Contract is entered into for execution while the part thereof as relates to 'Termination' is a contract that provides for the refraining, tolerating or doing an act by either M/s. DAMEPL or DMRC. The same would have been the case, in case, if ....
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....wise provided, point of taxation shall be,- (a) the time when the invoice for the service provided or agreed to be provided is issued: Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules, 1994, the point of taxation shall be the date of completion of provision of the service." In the instant case, the provision of the service in question by M/s. DAMEPL appears to be completed on the date of the arbitral award i.e.,11.05.2017, which is when the service of 'agreeing to tolerate an act' and the consideration accrued from DMRC to M/s. DAMEPL on that account was recognized. 4.11 The provisions of Section 142(11)(b) of the CGST Act, 2017, read thus: "(b) notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994 (32 of 1994);" Inasmuch as it appears that the provision of the service of 'agreeing to the obligation to tolerate an act ... ' by M/s, DAMEPL was completed before the coming into force of the GST law w.e.f.01.07.2017; th....
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.... 6.4 The assessee appear not to have submitted any reply/documents called for regarding the copies of all the basic underlying documents i.e., vouchers, debit notes, invoices raised on DMRC for dues, under the Arbitral Award. Hence in the absence of data to the contrary, the "Gross amount receivable from DMRC as Termination Payment" has been taken as "the gross amount charged" for the taxable service in question." xxxx xxxx 12. Now, therefore, M/s. Delhi Airport Metro Express P. Ltd., SPV of Reliance Infrastructure Limited, situated at Reliance Centre, Ground Floor, 19 Walchand Hirachand Marg, Ballard Estate, Mumbai, Maharashtra-400001, are hereby required to show cause, within 30 days of receipt of this notice, to the Principal Commissioner, Central Tax & Cx,, Delhi West COST & CX Commissionerate, having office at 4th & 5th Floor, ElL Annexe Building, Plot 2B, Bhikaji Cama Place, New Delhi-110066, as to why: (i) The services provided by them, as discussed at Paragraph 4 above, should not be classified as declared service under the category of "agreeing to the obligation to tolerate an act" as defined under Section 66E(e) of the FA, 1994 read with Section....
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....2017 which came to be rendered in favour of the writ petitioner and against the Delhi Metro Rail Corporation DMRC. The validity of that Award came to be assailed in a petition under Section 34 of the Arbitration and Conciliation Act, 1996 Act and which came to be dismissed by a learned Single Judge of this Court on 06 March 2018. However, the appeal under Section 37, which came to be preferred by DMRC, thereafter came to be partly allowed by a Division Bench of this Court in DMRC vs. Delhi Airport Metro Express Pvt. Ltd. 2019 SCC OnLine Del 6562 6. A Special Leave Petition against that judgment came to be preferred before the Supreme Court wherein two learned Judges of the Supreme Court allowed that appeal in Delhi Airport Metro Express Pvt. Ltd. vs. DMRC (2022) 1 SCC 131 and as a consequence of which the Award came to be restored. 7. The aforesaid decision of the Supreme Court has ultimately come to be set aside in terms of the judgment rendered on 10 April 2024 on a curative petition in DMRC vs. Delhi Airport Metro Express Pvt. Ltd. (2024) 6 SCC 357 We deem it appropriate to extract the following paragraphs from the decision rendered in that set of curative petitions: ....
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....a decision rendered by the Division Bench of the High Court in appeal under Section 37. The Division Bench had held that the award overlooked crucial facts and evidence on record that were crucial to the determination of the issues before the Arbitral Tribunal. This led to the award being perverse and patently illegal within the parameters of Section 34 as explained in the judgments of this Court in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] and Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] . The award overlooked the express terms of Clause 29.5.1(i) which stipulated that if "effective steps" were taken during the cure period by DMRC, the contractual power to terminate could not be exercised. This Court incorrectly considered CMRS certificate to be irrelevant to the validity of the termination. xxxx xxxx 66. In essence, therefore the award is unreasoned on the above important aspects. It overlooks vital evidence in the form of the joint application of the contesting parties to CMRS and CMRS certificate. The Arbitral Tribunal ignored the specific terms of the ter....
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....tive petition, in terms of Rupa Hurra [Rupa Ashok Hurra v. Ashok Hurra, (2002) 4 SCC 388] . 68. The curative petitions must be and are accordingly allowed. The parties are restored to the position in which they were on the pronouncement of the judgment of the Division Bench. The execution proceedings before the High Court for enforcing the arbitral award must be discontinued and the amounts deposited by the petitioner pursuant to the judgment of this Court shall be refunded. The part of the awarded amount, if any, paid by the petitioner as a result of coercive action is liable to be restored in favour of the petitioner. The orders passed by the High Court in the course of the execution proceedings for enforcing the arbitral award are set aside. 69. Before concluding, we clarify that the exercise of the curative jurisdiction of this Court should not be adopted as a matter of ordinary course. The curative jurisdiction should not be used to open the floodgates and create a fourth or fifth stage of court intervention in an arbitral award, under this Court's review jurisdiction or curative jurisdiction, respectively. 70. In the specific facts and circumsta....