TaxTMI 
TaxTMI 
2025 (12) TMI 211
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....he petitioner in O.P.No.993 of 2017 is the claimant before the learned Arbitrator whereas the petitioners in O.P.No.502 of 2017 are the respondents before the learned Arbitrator. Both petitions arise out of partly challenging the very same Award. 3. In this common order, for the sake of convenience, the parties will be referred to as are arrayed before the learned Arbitrator. 4. The facts leading to filing of these petitions are as follows : (i) The claimant is a company incorporated under the Companies Act, 1956 and is engaged in the business of property development in Tamil Nadu and other States. The claimant entered into a development agreement dated 14.2.2005 with the owners namely one Mr.Sheriff Dyan and M/s.Shedan Games Park & Holidays (P) Ltd. (for short, M/s.Dyan and Co.) for development of the lands ad-measuring 7.29 acres belonged to the said M/s.Dyan and Co., into a software technology park (STP) complex. As per the said agreement, the claimant was entitled to 74% of the super built-up area together with the proportionate undivided share (UDS) in the lands while the remaining 26% would be retained by the said M/s.Dyan and Co. (ii) On 07.12.2005, t....
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....nd that the claimant had imported duty free machinery under a Customs Bonded Warehouse License and B-17 bond availing exemption for developing the STP and transferred 74% of the STP along with the machineries to the first respondent without securing mandatory de-bonding or paying duty. (vii) The respondents thereafter filed an application under Section 9 of the Act before this Court seeking for interim relief against the confiscation of machinery. Thereafter, the claimant filed counter applications under Section 9 of the Act seeking security for the service tax demand, customs duty demand and other claims. This Court, vide order dated 29.3.2012, consolidated all the 9 applications filed under Section 9 of the Act and appointed an Arbitrator. (viii) The claimant filed a claim for a total sum of Rs. 31,08,56,413/-, which included the retained amounts, the service tax and the customs duty liabilities and damages. (ix) The respondents, in their defence statement, contended that the sum of Rs. 1,00,00,000/- was rightfully withheld for the incomplete snagging works and for non-production of the mandatory completion certificate. The respondents further submitted....
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....imant is entitled to transfer the imported capital machinery to the respondent without securing de-bondment from the Customs and Excise Department? (8) Whether the claimant had handed over the materials so as to demand for refund of Rs. 28,53,767/-? (9) Whether the respondents deposited the entire amount, which was deducted at the claimant's source into the account of Income Tax Department? (10) Have both the parties complied with the terms and agreements dated 07.12.2005, 21.5.2006 and 05.3.2008? (11) Whether the respondents are entitled to claim Rs. 10 crores towards damages suffered by way of counter claim? (12) Whether the counter claims are barred by limitation? (13) Whether the claimant is entitled for interest? If it is so, at what rate and at which period? (14) Whether the parties are entitled for costs? (15) Any other relief which the parties are entitled to ? Additional Issues : (1) Whether the claimant has completed the works mentioned in Schedule D of the settlement agreement dated 05.3.2008 for claiming payment of Rs. 1,00,00,000/- (Rupees one crore only) ? (2) Whethe....
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....to the date of payment by the respondent less Rs. 4,32,60,000/- already paid by the first respondent; and (b) Declaring that the respondents are liable to pay to the claimant the customs duty demanded by the Commissioner of Customs and Central Excise, Chennai vide the show cause notice No.18/ 2011 dated 18.4.2011 together with the interest, penalty and the cost of defending the show cause notice as spent by the claimant upto the actual date of payment by the respondents." 8. The learned counsel appearing on behalf of the claimant submitted as follows : The learned Arbitrator went wrong in holding that the respondents were not liable to pay to the claimant the service tax demanded by the Department in spite of the fact that the respondents made partial payment towards the service tax and such liability would continue until a final assessment was made. That apart, the learned Arbitrator completely misread the scope of Clause 1.2 of the settlement agreement, which did not provide for payment of service tax only after it was quantified. Hence, the finding of the learned Arbitrator was contrary to law and also is opposed to public policy. 9. Per contra, the learned cou....
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....service tax and that only at the time of the subsequent agreement between the parties, the issue of payment of service tax was taken into consideration and it was agreed that the claimant would discharge all the statutory liabilities including the service tax and also get indemnified from the respondents by discharging such statutory liabilities. 13. The specific case of the claimant was that Clause 1.2 of the settlement agreement dated 05.3.2018 was only with respect to the amount already quantified and that the same could not be relied upon to deny the subsequent calculation made by the Department. 14. While dealing with this submission, the learned Arbitrator has taken into account the fact that there was no such pleading available in the claim petition and that such a stand was taken by the claimant for the first time while filing a reply to the statement of defence filed by the respondents. 15. The learned Arbitrator has relied upon the express terms of the settlement agreement to ultimately hold that the entire service tax of Rs. 4,44,96,000/- has already been quantified and paid to the Service Tax Department and that the cause of action seeking for such declaration ....
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....as now become academic since the CESTAT, Chennai already allowed the appeal filed by the claimant and rendered a finding that the demand for payment of service tax was unsustainable. 23. The next issue pertains to the customs duty liability. 24. The learned counsel appearing on behalf of the claimant submitted that the payment of customs duty rests with the owners of the machinery and not with the contractor, who had imported them for the use of the owners. In Ex.C.34, which was the letter sent by the respondents to the Director of the Software Technology Parks of India (STPI), it has been confirmed that the claimant was only a contractor. 25. While dealing with this issue, it was contended that the learned Arbitrator had given a finding that the claimant had imported the machinery and when a question arose as to who had to meet the necessary customs duty, the learned Arbitrator rendered a finding against the claimant. This finding was rendered in spite of the fact that the STPI Directorate, under Ex.C.50, clarified that the STP Scheme did not require the developer to be an Export Oriented Unit or carry out the export obligations themselves as per the policy. However, a sh....