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TMI Blog2014 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner for the supply made in execution of works contract allotted is the main question involved in this petition. Another point of determination that has been raised as an objection by the respondent is as to whether the issue involved which happens to arise during the course of execution of the contract agreement can be taken up by the writ court without the same being referred to arbitration. Challenge to the maintainability of the present petition has also been raised by the respondents for want of territorial jurisdiction of this court. The relevant facts leading to this case are as under: (i) The petitioner, a joint venture organization carrying on, inter alia, the business of works of designing, fabrication, erection and commissioning of pen stock steel liner and all the hydro mechanical works and equipments and all the associated works in various States of India, was awarded a contract on December 17, 2004 by NEEPCO for supply, design, fabrication and erection of pen stock steel liner and all hydro mechanical works/ equipments under Kameng Hydro Electrical Project (Package IV) vide work order dated December 17, 2004. (ii) Before awarding of the work to the petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax authorities have given them time up to April 15, 2009 for production of C form in respect of sales made and it was stated that till the date of issue of said letter, i.e., April 20, 2009, the petitioner has not received C form from NEEPCO and that without the submission of C form issued by NEEPCO to the concerned sales tax authorities at Howrah, West Bengal, it may not anymore be possible for the petitioner to continue production/dispatch of pen stock steel liners from Howrah paying two per cent CST. (vi) NEEPCO had by its letter dated March 19, 2009 wrote to the petitioner that pursuant to discussion and meeting at Tezpur and requirement of Central sales tax declaration form C for the petitioner's dispatches from West Bengal to project site at Kimi, Arunachal Pradesh, NEEPCO confirms that the matter of issue of C form to the petitioner is under active consideration with the Corporation. It was further stated that owing to some administrative problem they are not in a position to issue C forms to the petitioner at that moment. The NEEPCO by its letter dated April 22, 2009 even wrote to the Commissioner of Commercial Taxes, Government of West Bengal, in connection wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uit pertaining to the contract. Further, contract agreement was executed at Shillong. Mr. T. Pertin, learned counsel for the respondent-Corporation, strongly arguing on the above preliminary objections, persuaded this court to reject the present writ petition as not maintainable for want of jurisdiction of this court. Moreover, Mr. Pertin submits that the present matter involves disputed question of fact, arising out of the contract, relating to furnishing of C form to the petitioner in view of the contractual stipulation in the contract agreement executed, giving rise to difference of opinion between the parties to the subject-matter, and such dispute cannot be adjudicated in a proceeding under article 226 of the Constitution inasmuch as it requires detailed examination of the disputed questions for which appropriate forum is the Arbitral Tribunal as provided under clause No. 70 of the contract agreement. With regard to the stand of NEEPCO that matter should have been referred to arbitration, Dr. Todi, learned senior counsel for the petitioner submits that it is not a dispute where some damage is claimed. According to him, where there is a dispute with regard to clauses of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties or by any law for the time being in force, does not constitute "dispute" between the parties for reference thereof to arbitration and the Arbitral Tribunal shall have no jurisdiction in such matters. Accordingly, where the law has given jurisdiction to determine certain matters to specific Tribunals only, those matters cannot be referred to arbitration. The Central Sales Tax Act, 1956 provides for applicability of the provisions of local State taxation law with regard to procedures and powers of the authorities and all disputes are to be decided either in appeal/revision to the concerned tax authorities, or in appeal to the Appellate Tribunal, or in revision to the High Court. Thus, it can be inferred that for matters relating to taxation, the Central taxation statute as well as the State taxation statute provide a hierarchy of Tribunals and under such circumstances it cannot be held that the matter in hand could be referred to arbitration. I have carefully gone through Subash Chander Gupta's case [2006] 144 STC 217 (J&K). In the said case it is held that the question was not merely of performance and non-performance of contractual obligations affecting the civil/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 722, and the decisions of this High Court in Har Shankar v. Deputy Excise and Taxation Commissioner [1975] 1 SCC 737, Radhakrishna Agarwal v. State of Bihar [1977] 3 SCC 457; AIR 1977 SC 1496, Ramlal & Sons v. State of Rajasthan [1976] 1 SCC 112; AIR 1976 SC 54, Shiv Shankar Dal Mills v. State of Haryana [1980] 2 SCC 437; AIR 1980 SC 1037, Ramana Dayaram Shetty v. International Airport Authority of India [1979] 3 SCC 489; AIR 1979 SC 1628 and Basheshar Nath v. Commissioner of Incometax [1959] 35 ITR 190 (SC); AIR 1959 SC 149. Though there is one set of cases rendered by this court of the type arising in Radhakrishna Agarwal case [1977] 3 SCC 457; AIR 1977 SC 1496, much water has flown in the stream of judicial review in contractual field. In cases where the decision-making authority exceeded its statutory power or committed breach of rules or principles of natural justice in exercise of such powers or its decision is perverse or passed an irrational order, this court has interceded even after the contract was entered into between the parties and the Government and its agencies. We may advert to three decisions of this court in Dwarkadas Marfatia and Sons v. Board of Trustees of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot deny a party of its right to have the issue decided by a writ court. The writ petitions are thus maintainable under the present set of circumstances." In my considered opinion the ratio of the judgment passed in Subash Chander Gupta & Sons [2006] 144 STC 217 (J&K) is fully applicable to the present case. The issue in the present case is with regard to issue of declaration form C by the respondent-NEEPCO to the petitioner for availing of the concessional rate of tax under the Central Sales Tax Act, 1956, which is a statutory exaction and a requirement for compliance of the provision of the Central Sales Tax Act, 1956 and not the breach of any of the terms of the contract agreement. Therefore, jurisdiction of the writ court is not barred in taking up matters of taxation and liabilities under taxation statutes and cannot refuse to interfere on the ground that the question raised arises out of contractual agreement and is one of enforcement of contractual obligation and the same should be referred to arbitration. The writ court under such circumstances, cannot deny a party of its right to have the issue decided by a writ court. With regard to contention of the NEEPCO that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company at a place where the "cause of action", either in whole or in part, arises. Even at the place where "cause of action" for a suit may have arisen, a suit may be instituted if the sole or principal office of the company is located there, for the Explanation to section 20 creates a legal fiction that a company shall be deemed to have been carrying on business at the place, where its sole or principal office is located. The petitioner also relies upon the judgment of the apex court in Navinchandra N. Majithia v. State of Maharashtra [2000] 7 SCC 640, which was also relied upon in the case of Subash Chander Gupta & Sons [2006] 144 STC 217 (J&K). The apex court in Navinchandra N. Majithia's case [2000] 7 SCC 640 held as under: "From the provision in clause (2) of article 226, it is clear that the maintainability or otherwise of the writ petition in the High Court depends on whether the cause of action for filing the same arose, wholly or in part, within the territorial jurisdiction of that court. In legal parlance the expression 'cause of action' is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engal, instead of its earlier declared place at Kota in Rajasthan as declared at the time of submission of tender contemplating that the materials would be fabricated at their manufacturing unit at Kota and would be transported to the project site. Therefore, if for the own convenience of the petitioner they have chosen to fabricate the materials at Howrah, West Bengal and in the process had become liable for payment of tax the onus to redeem the same cannot be placed on the shoulder of the NEEPCO. It was further submitted that as per clause No. 45, Volume 1, Part III of the conditions of contract, the petitioner was under contractual obligation to warn the NEEPCO at the earliest opportunity of any future event or circumstances that may increase the contract sum. The non-issuance of C form is neither illegal nor arbitrary due to the fact that the goods involved in works contract are taxable under the Central Sales Tax Act, 1956, if there is inter-State sale of goods. The supply of the materials were under the scope of contract as per clause No. 48 and all taxes, duties are deemed to be included in the quoted rates of items of work in view of the provision under clause No. 7 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of a State under whom one is registered. The NEEPCO being a registered dealer under the Central Sales Tax Act in the State of Arunachal Pradesh can obtain such C forms without any financial burden. In reply to the contentions of the NEEPCO, Dr. Todi learned counsel for the petitioner, also submits that NEEPCO in its affidavit filed, have taken contradictory stands. NEEPCO's stand that neither the setting up of workshop at Howrah nor any extra financial involvement or issuance of C form was discussed and that if the petitioner is liable for payment of taxes it cannot be placed on the shoulder of NEEPCO is totally without basis. He submits that in the affidavit filed NEEPCO admitted that the materials would be fabricated at the petitioner's manufacturing unit at Kota in Rajasthan. The State of Rajasthan and West Bengal both are outside the State of Assam and if NEEPCO has no problem for the State of Rajasthan, there cannot be any ground or have any problem for West Bengal since the petitioner informed NEEPCO about setting up its factory in West Bengal. Dr. Todi referred to section 8 of the Central Sales Tax Act, 1956 and the same is quoted below: "8. Rates of tax on sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority: Provided that the declaration is furnished within the prescribed time or within such further time as the authority may, for sufficient cause, permit." Referring to the aforequoted section 8, Dr. Todi submits that section 8(1) of the Central Sales Tax Act, 1956 provides that two per cent tax shall be levied on dealer who in the course of inter-State trade or commerce, sells to another registered dealer. Sub-section (4) of section 8 provides that provision of sub-section (1) shall not apply unless the dealer selling the goods furnishes a declaration signed by registered dealer to whom the goods are sold giving the prescribed particulars in prescribed form obtained from prescribed authority. He further submits that rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957 provides that the declaration form referred to sub-section (4) of section 8 shall be in forms C and D, respectively. Failure to furnish C form as per sub-section (2) of section 8 amounts to selling to non-registered dealer and in that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such sales and entitles the registered dealer to pay this concessional rate of tax and prescribes the model by which he can claim this concessional rate, it could not have been the intention of the Legislature to defeat this provision at the sweet will and pleasure of the purchaser of the goods. Form C can be signed only by the purchaser of the goods and it is only by filing such forms, the registered dealer can take advantage of the provisions contained in section 8 of the Act; and that right cannot be defeated by the volition of another registered dealer who is the purchaser. It cannot be the intention of the Legislature to deny this benefit upon the refusal of the purchaser to issue C forms and it is made clear by providing under sub-rule (3) of rule 12 that in case the original forms issued by the dealer are lost, the seller can demand the purchaser to issue a duplicate form, which necessarily implies that even initially there was such an obligation to issue C forms. Merely, because the contract does not stipulate that the Food Corporation of India shall issue C forms in regard to inter-State sales to its sellers, it cannot refuse to issue the forms to its seller who is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f every such form so lost an indemnity bond in form G to the notified authority from whom the said form was obtained, for such sum as the said authority may, having regard to the circumstances of the case, fix. Such indemnity bond shall be furnished by the selling dealer to the notified authority of his State if a duly completed form of declaration received by him is lost, whether such loss occurs while it is in his custody or while it is in transit to the notified authority of his State: Provided that where more than one forms of declaration is lost, the purchasing dealer or the selling dealer, as the case may be, may furnish one such indemnity bond to cover all the forms of declarations so lost. (3) Where a declaration form furnished by the dealer purchasing the goods or the certificate furnished by the Government has been lost, the dealer selling the goods, may demand from the dealer who purchased the goods or, as the case may be, from the Government, which purchased the goods, a duplicate of such form or certificate, and the same shall be furnished with the following declaration recorded in red ink and signed by the dealer or authorised officer of the Government, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in case the original form issued by the purchasing dealer is lost, the selling dealer can demand the purchasing dealer to issue a duplicate form. This necessarily implies that there exists an obligation to issue C forms by the purchasing dealer. Upon consideration of the statutory provisions as above and the ratio in the case of Modern Proteins Ltd. [1983] 52 STC 403 (AP), I am of the considered view that NEEPCO is statutorily bound under the provisions of the Central Sates Tax Act, 1956 to issue C forms to the petitioner as per the claim made. Merely, because the contract agreement does not stipulate issue of C forms it cannot refuse to issue the forms to the petitioner who is entitled to the benefit under section 8(1) of the Act only on production of such forms. There is an express provision requiring the purchasing dealer to issue C forms, creating a statutory obligation to issue such forms to enable the selling dealer who has sold the goods in the course of interState sales, to avail of the benefit of lower rate of tax under the Central Sales Tax Act and avoid the liability of paying higher rate in respect of its turnover in case of failure to submit C forms to be issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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