TaxTMI 
TaxTMI 
2026 (4) TMI 1650
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.... Department (PWD, for short) of the Government of Tripura for execution of a works contract namely "Improvement of Manu to Kanchanpur Road (L-35.00 Km)/SH:-Formation in widening, metalling, carpeting including protection wall and drainage work Job No.TP/ COM/ 114/2016-17". 3. The petitioner participated in the said tender and emerged successful. 4. At the time of quoting the rates for the said tender, the petitioner had kept in mind the tax payable @ 6% of the gross value on such works contracts under the Tripura Value Added Tax Act, 2004 (TVAT Act, for short) regime. 5. Under Section 4(3) of the said Act, levy of VAT was permitted on works contract providing that in respect of such transfer, only so much value of goods involved in the works contract which has been paid to the dealer during the period, shall be taken into account for determining the turnover for the said period. The said provision also provided for deduction of tax at source in matters relatable to works contract at such rates as may be prescribed under the Rules framed under the said Act. 6. Rule 7(1) of the Tripura Value Added Tax Rules (TVAT Rules, for short) provided for deduction of VAT at source i....
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....ies, cess, toll tax at source, Tripura sales tax shall also be deducted at source from the bills of the contractor(s) at the rates as notified by the Government, from time to time. Compulsory deduction for all works-1(one)% cess on the gross payable amount of running/final bill as per "Building and other construction workers welfare Cess Act, 1996." "Clause 42. Any Central or State sales and other taxes including VAT on completed items of works of this contract as may be levied and paid by the contractor shall be reimbursed by the department to the contractor on proof of payment to the extent indicated in Part-II of Schedule A." 14. However, the agreement did not contain any Schedule A and consequently there was no Part-II also though such a reference to them is made in clause 42.1. 15. The respondents (PWD department), however, continued to make deductions at the rate of 12% instead of 6% from each of the Running Accounts Bills raised by the petitioner (Annexure-6). 16. Petitioner submitted a letter to the Chief Engineer of the PWD department on 16.08.2022 contending that in his letter dt. 04.11.2017 he had specifically imposed a condition that he would ....
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....d and contending that SGST and CGST have been deducted from the bills of the petitioner as per Clause 42 of the agreement. It was stated in the said communication that the deduction of SGST and CGST was valid because it was as per Clause 42 of the agreement and the deducted amount of CGST and SGST of Rs. 47,76,250/- was already reimbursed by the said department to the petitioner and so there was no question of making a refund of Rs. 2,21,48,746.08/-. 23. In the course of hearing of the Contempt Case, vide the order dt. 30.05.2023 the Division Bench directed the petitioner to submit proof of the deposit of tax made by him. 24. In response thereto, petitioner gave a letter to the Executive Engineer, PWD on 05.06.2023 narrating the deductions made from each of his RA Bills. 25. The Executive Engineer, PWD responded on 19.06.2023 to the petitioner stating that he was not able to trace the relevant documents for ascertaining as to whether the amounts claimed to have been deducted by the petitioner have actually been deposited as GST relatable to the work in question. 26. Petitioner again gave a detailed representation on 10.07.2023 giving the break-up of the amount deducted ....
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....P pertaining to differential amount of tax in a subsisting contract had been notified vide the Annexure-R/4 and that the amount payable to the petitioner would depend upon that. The stand of the respondents 2,5 and 6 (the PWD Department of the Govt.of Tripura): 35. Subsequently, an additional counter affidavit was filed by the PWD department reiterating the same stand that the petitioner is not entitled to refund of the said amounts since the amounts were collected as per the terms of the agreement between the parties. 36. It was reiterated that the work order was issued after promulgation of the CGST Act/TGST Act and the work was also executed thereafter and so under Section 142(10) of the GST Act, petitioner was liable to pay the tax. 37. Subsequently, another affidavit was filed on 10.01.2025 by the Deputy Secretary to the Government of Tripura in the PWD department stating that the remaining Security Deposit of Rs. 25,00,000/- was paid to the petitioner on 01.10.2024 and the deducted CGST of Rs. 23,57,214/- and SGST of Rs.23,57,214/- were already reimbursed by the department to the petitioner after filing of the GSTR-7A return; that the balance GST for the balance f....
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....tage/rate quoted by the contractor shall be deemed to be inclusive of the sales and other levies, duties, royalties, cess, toll taxes of Central and State Governments, local bodies and authorities that the contractor will have to pay for the performance of this contract. The employer will perform such duties in regard to the deduction of such taxes at source as per applicable law. In addition to deduction of Income Tax/VAT & other such levies, duties, royalties, cess, toll tax at source, Tripura sales tax shall also be deducted at source from the bills of the contractor(s) at the rates as notified by the Government, from time to time. ...." 46. So the petitioner is deemed to have agreed to pay to the Central and State Government levies under the CGST,2017 and TGST,2017 for the works contract he is executing. 47. Section 142(10) of the TSGST Act states that goods or services or both supplied on or after the appointed day (01.07.2017) in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the said statute. 48. Afortiori, if the contract itself is entered into after the appointed day, the incidence of tax, as rightly ....
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.... on production of proof of payment. This was challenged in Civil Misc.(Arbitration) No.04 of 2020 by the State Government under Section 34 of the Arbitration & Conciliation Act, 1996, but the Commercial Court dismissed the same on 23.02.2022. The State Government then filed Arb.A. No. 11 of 2022 before this Court. The Division Bench of this Court also approved the reasoning of the Arbitrator and held that parties were bound by the Clause 42.1 of the agreement and when payment of service tax dues on the part of the contractor with the service tax department in that case was not in dispute, the contractor was entitled to be reimbursed under Clause 42.1. Thus, the Division Bench affirmed the reasoning of the Arbitrator and dismissed the Arbitration Appeal. The judgment of the Division bench was also affirmed by the Supreme Court in SLP(C). No. 677/2025 dt.19-1-2026. 53. So the respondents cannot take advantage of absence of Part-II of the Schedule-A as mentioned in Clause 42.1 of the agreement to deny reimbursement of taxes paid by petitioner which are supported by proof of such payment in the form of Annexures to the affidavit dt.17.2.2025 filed by him. 54. The m....