TaxTMI 
TaxTMI 
2025 (1) TMI 1843
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.... contracts works on behalf of the Government of Telangana and other State Governments. In the tender process floated by the respondents, petitioner was declared successful bidder and was awarded work of execution of Stage - III Pumping Station (5X30 MV) of Kalwakurthy Lift Irrigation Scheme near Gudupally Gattu balancing reservoir near Gowreddipalli Village, Gandipet Mandal, Mahabubnagar District (for short, 'Project'). In furtherance thereof, petitioner entered into agreement No.10/EPCMGJLIP/2005-06 dated 28.09.2005 (for short, 'Agreement') with Project Administrator & Superintendent Engineer, Mahatma Gandhi Lift Irrigation Project i.e., respondent No.2. 3. It is stated that as per Clause 1.44 of the General Conditions (Instructions to bidders) (for short 'GTC') an amount of Rs.100 million rupees i.e. Rs. 10,00,00,000/- (Rupees ten crores only) has to be deposited by the petitioner towards security deposit by way of demand draft in favour of Pay and Accounts Officer (PAO), Mahabubnagar. Petitioner was obligated to deposit the said amount to PAO or respondent No.2. The said amount will be released after one year of completion of contract period including ....
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....ease the security of Rs.10,00,00,000/- as work entrusted to the petitioner - company was completed including the operation and maintenance by 21.08.2021. Petitioner furnished work completion certificate dated 29.07.2022 issued by respondent No.3 along with representation dated 26.08.2023 to respondent No.3 requesting for release of security deposit. Respondent No.3 forwarded the representation dated 26.08.2023 of petitioner - company to respondent No.2. Respondent No.3 issued letter vide Lr.No.SE/ Irrigation/C.1/NGKL/OT1/AE1/Lift.3/261M dated 24.11.2023 stating that as per the Clause 3.5.9 it is not possible to release the security deposit of Rs.10,00,00,000/- without dropping the Audit paras/objections. 6. When the matter was listed for admission, Mr. S. Rahul Reddy, learned Special Government Pleader, representing learned Additional Advocate General for respondents opposed the grant of interim order and sought time to get instructions. After giving reasonable opportunity of hearing, this Court has passed order on 11.03.2024, which reads as under: "When the matter was taken up for hearing on 23.02.2024, Mr. S. Rahul Reddy, learned Special Government Pleader, representi....
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.... before hearing the contempt case. As per his request, the contempt case is taken up along with vacate petition. 8. In the counter affidavit along with vacate petition filed by respondents it is stated that the execution of Project on EPC basis is one of the packages of MGKLI Scheme. The Government had accorded the administrative sanction for Rs.1500 Crores vide G.O.Ms.No.65. This work of Execution of Stage-III Pumping Station was technically sanctioned for Rs.695 crores vide PAR No.16/MGJLIP/2005-2006 dated 26.09.2005 and entrusted to petitioner - company vide Agreement dated 28.09.2005 for Rs.631,98,81.000/- (Rupees six hundred thirty-one crores ninety eighty lakhs eighty-one thousand only) on EPC Basis. It is submitted that as per clause 1.44 of GTC, the amount of security deposit of Rs.10,00,00,000/- will be released after one year of completion of contract period including operation and maintenance period to the bidder. 9. It is submitted that the according to the instructions contained in G.O.Ms.No.94 I&CAD Department dated 01.07.2003, an amount equivalent to 1% Estimated Contract Value (EMV) shall be collected from all participating bidders towards Earnest Money Deposi....
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....#39;ble High court of Andhra Pradesh, Hyderabad was disposed the case on 28.8.2009 and stated that as such there is no short recovery of EMD as per the original terms and conditions of contract with the agency. The Accountant General, Hyderabad has advised that address the Public Accounts Committee of Telangana State legislature. Para No.1(B) In correct inclusion of LS Provision resulting to extra benefit to contractor of Rs.607.20 Lakhs. The latest action taken report is awaited from the Accountant General, Hyderabad. Para No.1(C) Short recovery of VAT Rs.11.49 Lakhs. The short recovery of VAT Rs.11,48,527/- had recovered in Running Account Bill No.142nd & part vide C.B. Voucher No.96 Dt.16.09.2023. The latest action taken report is awaited from the Accountant General, Hyderabad. JLIP -2 LAR 414/07-08 :- Major Irregularities. Section :- A :- Para No.1. Savings due to change in designs non- accrual to Government account Rs.19.21 Crores. Section :- B :- Para No.II. Unintended benfit to the agency due to the agency due to inclusion of central excise duty on electro mechanical Equipment in the IBM Rs.4428.59 Lakhs. Para No. III :- ....
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.... It is submitted that Para 1(C) of the short recovery of VAT of Rs.11.49 lakhs was also dropped by the AG, Hyderabad, and the same was informed to respondent No.3 by letter dated 19.01.2024. The objection of Section-A :- Para No.1 savings due to change in designs non-accrual to the Government account of Rs.19.21 crores is incorrect. The work was awarded to petitioner - company on EPC is for a sum of Rs.631,98,81,000/- (Rupees six hundred and thirty one crores ninety eight lakhs eighty one thousand only) and as per the said contract, the petitioner is bound to complete the work and hand over the Project to respondents, hence, the objection taken by AG about saving of Rs.19.21 crores is incorrect. 14. In so far as, Section :- B :- Para No.II, the unintended benefit due to agency inclusion of Central Excise Duty (CED) on Electro Magnetic Equipment (EME) in the Internal Bench Marking (IBM) is Rs.4428.59 lakhs. It is stated that as per the respondents the estimate in the IBM for the Project covered by the Agreement dated 28.09.2005 is Rs.63955.16 crores which includes an amount of Rs.25423 lakhs towards EME and sum of Rs. 1713 lakhs towards 22 KV switch yards, while arriving at IBM v....
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.... cess. As respondents have not included the labour cess in the estimates, they are not entitled to collect Rs.2,31,52,682/- in view of the order dated 01.05.2024 passed by this Court in W.P. No.19995 of 2010. 17. It is submitted that as per Para No.IV short recovery of NAC @ 0.25% totalling to Rs.5,79,596/- and short recovery of seigniorage charges by Rs.2000/-, the said paragraph was dropped by the AG, Hyderabad, and the same was intimated to respondent No.3. The office of the Accountant General (Audit) Telangana, Hyderabad, addressed letter dated 18.07.2024 to respondent No.3 informing that as per the records no paras pertaining to the Project are pending with Public Accounts Committee (PAC). 18. Heard Mr. Ashok Reddy Kanathala, learned counsel for the petitioner and Mr. S. Rahul Reddy, learned Special Government Pleader representing learned Additional Advocate General for respondents, and perused the material on record. 19. Learned counsel for the petitioner submitted that tender was awarded to the petitioner for Rs.631,98,81,000/-. It is an EPC contract and based on the estimated value of the contract i.e. Rs.695 crores quoted by the respondents, petitioner has quoted ....
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....s.4375.25 lakhs. The amount of Rs.10,00,00.000/- is available with respondents and petitioner was directed to remit excess amount in the running bills totalling to Rs.23,93,25,000/- (Rupees twenty-three crores ninety three lakhs and twenty five thousand) under the Clause 3.15.10 by way of demand draft in favour of respondent No.3. 22. Learned Special Government Pleader submitted that Clause 1.44 of GTC has to be read with Clause 3.15.10 and also Clauses 3.15.8 and 3.15.9 and merely because completion certificate was issued, petitioner cannot be granted relief. The Clause 3.15.10 reads as under: "3.15.10 Final Payment The Employer's Representative shall issue to the Employer, with a copy to the Contractor, the Final Payment Certificate within a reasonable time after receiving the Final Statement and written discharge in accordance with Sub-Clause 3.15.8 and 3.15.9, stating: (a) the amount which is finally due and, (b) After giving credit to the Employer for all amounts previously paid by the Employer and for all sums to which the Employer is entitled, the balance, if any, due from the Employer to the Contractor or from the Contractor to ....
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....ed to be supplied occurring after the expiry of the original contractual delivery date shall be to the Supplier's account. Clause 1.26.6 As regards the Indian Income tax, surcharge on Income Tax if any and any other Corporate Tax, the employer shall not bear any tax liability in respect of the contracts irrespective of the mode of contracting. The bidder (whether domestic or foreign) shall be liable and responsible for payment of such tax, if attracted under the provision of law. As per Clause 1.26.5, custom duty, sales tax etc, are to be levied on the employer - respondents for the goods supplied on or after date of the contract and before the expiry of contractual date. After expiry of contractual delivery date, statutory levies have to be paid by the contractor - petitioner. The said clause cannot be pressed into service by the respondents. It is because respondents have not paid any customs duty or sales tax. They claim that customs duty exemption is availed by the petitioner, thereby, petitioner has received unintended benefit. The learned Special Government Pleader has not pointed out any clause in the agreement or general terms and conditions w....