Allowed

M/S.Raja Transports v. Union of India

Kerala HC22 Oct 2008WP(C)/12171/2004

Case brief

AI extract

What is this about?

In this writ petition, a transport contractor challenged deductions of service tax by a government company respondent, arguing the contract did not authorize recovery since liability lay with the respondent. The court held that statutory liabilities cannot be recovered from a party unless authorized by contract, allowed the petition, and directed a refund.

What did the court decide?

Directed the 3rd respondent to refund the amounts covered by Exts. P5 and P7 to the petitioner within two months.

M/S.Raja Transports Vs Union of India — Contract and Commercial Disputes | Kerala HC (2008)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE S.SIRI JAGAN

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WEDNESDAY, THE 22ND OCTOBER 2008 / 30TH ASWINA 1930

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WP(C).No. 12171 of 2004(Y)

PETITIONER(S):

M/S. RAJA TRANSPORTS, TRANSPORT CONTRACTORS, TRICHY MAIN ROAD, ARIYALUR, REPRESENTED BY ITS PARTNER A. HYDER ALI.

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BY ADV. SRI.K.JAJU BABU

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SMT.M.U.VIJAYALAKSHMI

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RESPONDENT(S):

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UNION OF INDIA, REPRESENTED BY SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL SECRETARIAT, NEW DELHI.

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THE COMMISSIONER OF CENTRAL EXCISE, C.R.BUILDINGS, I.S.PRESS ROAD, COCHIN-18

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M/S. MALABAR CEMENTS LTD., WALAYAR P.O., PALAKKAD, REPRESENTED BY ITS MANAGING DIRECTOR.

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ADV. SRI.DINESH R.SHENOY, ADDL.CGSC FOR R1,2 SRI.B.S.KRISHNAN (SR.) FOR R3 SRI.K.ANAND (A.201) FOR R3

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SMT.LATHA KRISHNAN FOR R3 SRI.CYRIAC KURIAN, CGSC FOR R1 TO 3 SRI. JOHN VARGHESE, S.C.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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PETITIONER'S EXHIBITS: W.P.C.NO. 12171/2004.

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EXT.P1 TRUE COPY OF WORK ORDER DT. 17-10-1997. EXT.P2 OBJECTION DT. 3-2-1998.

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EXT.P3 LETTER DT. 14-3-1998. EXT.P4 JUDGMENT IN O.P.NO. 4335/1998. EXT.P5 NOTICE DT. 14-8-2003. EXT.P6 OBJECTION DT. 29-8-2003. EXT.P7 LETTER DT. 15-10-2003. EXT.P8 AMENDMENT ACT 32 OF 1994.

[TRUE COPY]

P.S TO JUDGE.

S. Siri Jagan, J.

W. P (C) No. 12171 of 2004

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Dated this, the 22^nd October, 2008.

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J U D G M E N T

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The petitioner is a transporting contractor. They executed certain works on behalf of the 3^rd respondent Company, which is a Government Company. In respect of the said service, service tax was originally demanded. This Court set aside that demand. The matter went up to the Supreme Court and the judgment of this Court was confirmed. However, in the meanwhile, the statute was amended with retrospective effect by which service tax became payable in respect of the service provided by the petitioner to the 3^rd respondent. The 3^rd respondent paid the service tax to the 2^nd respondent. However, by Exts.P. 5 and P7, the 3^rd respondent deducted the service tax paid by them to the 2^nd respondent from the petitioner. The petitioner is challenging Exts.P 5 and P7 demands and seeking the following reliefs:

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“i) Issue a writ of certiorari or other appropriate writ, order or direction, calling for the records leading to Exts.P 5 and P7 and quash the same;

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ii) issue a writ of mandamus or other appropriate writ, order or direction, directing the 3^rd respondent to refund the amount recovered from the petitioner as per Exts.P 5 and P7 with interest forthwith;

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iii) declare that as per Ext. P8 the petitioner is not liable to pay the Service Tax demanded as per Exts.P 5 and P7.”

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The contention of the petitioner is that the liability to pay service tax is squarely on the 3^rd respondent and therefore without a contract enabling them to deduct that liability from the petitioner, the same cannot be recovered from the petitioner. The petitioner points out that in Ext. P1 contract, there is no such provision for recovery of service tax from the petitioner. That being so, there is no contract between the petitioner and the 3^rd respondent enabling the 3^rd respondent to recover the service tax paid by them from the

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W.P.C. No. 12171/2004 -: 2 :-

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petitioner, is the contention raised.

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The 2^nd respondent has filed a counter affidavit in which it is categorically stated that the liability to pay service tax is squarely on the 3^rd respondent. This is not disputed by the 3^rd respondent also. What the 3^rd respondent submits is that earlier also, the amounts were deducted from the petitioner which the petitioner paid and therefore the petitioner cannot now raise a dispute in regard to subsequent deductions also. The second contention is that as per the contract, although there is no specific condition therein, the 3^rd respondent has a right to recover service tax from the petitioner.

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I have considered the rival contentions in detail.

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As I have already stated, the 2^nd respondent has stated that the liability to pay service tax is clearly on the 3^rd respondent which the 3^rd respondent does not dispute. Statutory liabilities due from a party to a contract cannot be recovered from the other party to the contract unless the terms of the contract specifically authorise that party to the contract to do so. Here, admittedly, Ext. P1 is the terms of the contract, which does not provide for recovery of service tax from the petitioner. Therefore, the contention that as per the contract, the 3^rd respondent can recover service tax from the petitioner cannot be sustained.

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So far as the other contention is concerned, the petitioner had in fact objected to the recovery by Ext. P2. Of course, by Ext. P3, the 3^rd respondent had reiterated their right to recover service tax from the petitioner. But, counsel for the petitioner points out that in Ext. P3, it is specifically stated that there is a stay by the High Court which is the reason cited for refusing to refund the same. Whatever that be, in so far as there is no estoppel in the matter, the petitioner cannot be prevented from seeking refund of the amount illegally

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W.P.C. No. 12171/2004

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-: 3 :-

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collected from them. In the above circumstances, I do not find any merit in the contentions raised by the 3^rd respondent. That being so, the petitioner is entitled to refund of the amounts recovered from them as service tax by the 3^rd respondent, which is their liability.

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Accordingly, there would be a direction to the 3^rd respondent to refund the amounts covered by Exts.P 5 and P7 to the petitioner within two months from the date of receipt of a copy of this judgment. Counsel for the petitioner prays for a direction to pay interest also. I am not inclined to direct payment of interest in the peculiar facts and circumstances of the case. The writ petition is allowed as above.

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S. Siri Jagan, Judge.

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Tds/

M/S.Raja Transports v. Union of India

Case brief

What is this about?

What did the court decide?

M/S.Raja Transports v. Union of India

Case brief

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