TMI Blog2011 (9) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... urrency of the work which were first referred to the Dispute Resolution Expert by the Chief Engineer, PWD Maintenance Zone M-3 in terms of para 21.1 of the General Conditions of Contract (GCC). The recommendations of the Dispute Resolution Expert were not acceptable to the respondent-claimant. Accordingly, he invoked Clause 22 of the GCC which contains the arbitration agreement between the parties and called upon the Chief Engineer to refer the disputes to arbitration. Consequently, the Arbitrator was appointed. 4. The learned Arbitrator made his award dated 15.06.2009, awarding the claims of the respondent-claimant. It was held that the petitioner was liable to pay service tax leviable on the service rendered by the respondent-contractor to the petitioner so that the same could be deposited with the Government Exchequer. However, while rendering the said award the learned Arbitrator took into account an office memorandum dated 28.01.2009, whereby Clauses 37 and 38 of the GCC were amended. 5. The petitioner, aggrieved by the award dated 15.06.2009, assailed the same before this Court by filing O.M.P. No. 578/2009 under Section 34 of the Act. This Court set aside the said awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not pay service tax. The respondent also sought to place reliance on Condition No. 13.3 of the contract, which reads that: All duties, taxes, royalties and other levies payable by the bidder under the contract, and under applicable laws or for any other cause, shall be included in the rates, prices and total bid price submitted by the bidder. 10. As aforesaid, the learned Arbitrator vide his award dated 11.05.2010 has again allowed the respondent s claim. The reasoning given by the learned Arbitrator is that as on the date of the submission of the bids, i.e., 15.04.2005, service tax was not applicable to the road maintenance works. Consequently the stand of the petitioner taken in the pre-bid conference that the petitioner was not liable to pay service tax on road maintenance works was correct in the light of the fact that there was no such tax levied by law on that day. He further held that the mere knowledge of the respondent that, in future, service tax would be levied on road maintenance works could not be taken cognizance of, in the absence of a notification covering such services within the ambit of service tax. Since service tax was imposed w.e.f. 16.06.2005, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the day when the bid was submitted i.e. 15.04.2005, as a matter of fact, service tax was not leviable on the road maintenance works. The respondent, therefore, did not include the component of service tax while making its bid. Condition 13.3 would be applicable only in respect of such of the taxes and levies which were payable on the day when the bid was made and would not include levies and duties, which came into force after the submission of the bids. In this regard she lays specific emphasis on the words under applicable laws found in Condition No.13.3. She also places reliance on the decision of this Court in Pearey Lal Bhawan Association V. Satya Developers Pvt. Ltd, 173 (2010) DLT 685 and Food Corporation of India V M/s A.M.Ahmed Co. and Anr, JT 2006 (10) SC 62. 14. The examination of an arbitral award by this Court, under Section 34 of the Act, can be done on limited grounds. While examining the award, the Court does not sit as an appellate Court. If the view taken by the learned Arbitrator is a plausible view, the Court would be loathe to interfere with the award. 15. No doubt, when the respondent raised its query in the pre-bid conference, the respondent pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemicals (supra) is misplaced. The contractual clause considered by the Supreme Court in that case, namely, Clause 2.03 provided that if the petitioner company gives one month s notice to extend the contract for a further period of one year from the expiry of the period mentioned in Clause 2.01, the Contractor shall be bound to continue to do the work and render services on the same terms and conditions as contained in the contract during such extended period, except for the statutory increase in the wages of Dock Labour allowed by the Dock Labour Board. The note appended to Clause 2.03 further made it clear that The rates indicated against first and 2nd year above have been taken from MDLE S Circulars from time to time. But the rates at which the contact is initially awarded shall remain firm throughout the period of one year from the date of award and shall not be subject to any escalation whatsoever. Similarly, the rates allowed for the extended period of one year, if any, after considering the statutory increase, if any, in the wages of Dock Labour will also remain firm throughout the extended period of one year and shall not be subject to any escalation whatsoever, irrespecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjective of the levy as explained by the Supreme Court, were to be taken into consideration, it is the service which is taxed, and the levy is an indirect one, which necessarily means that the user has to bear it. The rationale why this logic has to be accepted is that the ultimate consumer has contact with the user; it is from them that the levy would eventually be realized, by including the amount of tax in the cost of the service (or goods). 20. After referring to Section 64-A of the Sale of Goods Act, which visualizes and provides for situations where levies of tax are imposed after the contract (for sale of goods) is entered into, the Court further observed:- The above provision also clearly says that unless a different intention appears from the terms of the contract, in case of the imposition or increase in the tax after the making of a contract, the party shall be entitled to be paid such tax or such increase. Although there is no explicit provision to that effect, enabling lessors such as the plaintiff, to the service tax component, this Court is of the view that there is sufficient internal indication in the Act, through Section 83 read with Section 12-A and Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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