Home Case Index All Cases Service Tax Service Tax + HC Service Tax - 2022 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 986 - DELHI HIGH COURTScope of contractual agreement - Reimbursement of Service Tax and Environmental Compensation Cess - period between October, 2013 to June, 2017 - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- The Service Tax was included in the tax invoices raised by the service providers to CEC. CEC had made payment of the said invoices and sought reimbursement of the Service Tax charged by the service provider. In terms of a Notification dated 01.03.2016, the services pertaining to construction of flyovers was also exempted from Service Tax - CEC was exempted from payment of any tax in respect of any service rendered by it for execution of the Agreement in question. As mentioned above, the Agreement was essentially an Item Rate Contract and CEC was not assessed to Service Tax in respect of any of the items executed by it for performance of its obligations under the Agreement. Undisputedly, CEC’s claim is for reimbursement of Service Tax included in the services availed by it and not the services rendered by it. The Arbitral Tribunal had proceeded on the basis that since CEC was assessed to Service Tax, albeit, on a Reverse Charge Mechanism, in respect of certain services, it was entitled to reimbursement in terms of Clause 37(i) of GCC read with Clause 14 of the Instructions to Bidders - CEC is not claiming reimbursement of Service Tax in respect of the Agreement executed by it or the works performed by it; CEC claims the Service Tax levied in respect of the services availed by it from third party service providers. This is, obviously, the Service Tax chargeable in respect of contracts between the third-party service providers and CEC. Clearly, this is outside the scope of Clause 37(i) of GCC. Although, it is well settled that matter regarding interpretation of a contract falls within the jurisdiction of Arbitral Tribunal and the Courts would not normally interfere with such interpretation. However, in the present case, this Court is of the view that Arbitral Tribunal’s interpretation of Clause 37(i) of the GCC to the extent it includes reimbursement of Service Tax levied in connection with contracts / arrangements between CEC and third parties, is fundamentally flawed and vitiates the impugned award by patent illegality - there is merit in the petitioner’s contention that the award of reimbursement of Service Tax is contrary to the express terms of Clause 37(i) of the GCC. The impugned award to the extent of a sum of ₹ 1,38,58,095/- awarded in favour of CEC in respect of Claim no. 1, is set aside. Consequently, no interest is also payable on the said amount - The petition is partly allowed.
|