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2016 (2) TMI 810 - TRIPURA HIGH COURT

2016 (2) TMI 810 - TRIPURA HIGH COURT - [2015] 83 VST 113 (Tri), 2016 (41) S.T.R. 403 (Tripura) - Reverse charge - GTA services - it was contended that the FCI has wrongly deducted the service tax from the contractual amount and the same should be ordered to be refunded to the petitioners. - scope of the contract / agreement - Held that:- the note as incorporated clearly indicates the intention of the parties that the rate to be quoted by the contractor should be inclusive of all taxes, levies, .....

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e asked to quote rates either inclusive of tax or exclusive of tax. If they are inclusive of tax then the contractor is liable to pay all the taxes therein. - No merit in the writ petition of the appellant - Decided against the appellant. - WP(C) NO.269 of 2010 along with WP(C) NO.270 of 2010 along with WP(C) NO.284 of 2010 along With WP(C) NO.421 of 2010 - Dated:- 30-6-2015 - MR. DEEPAK GUPTA, CJ AND MR. S C DAS, J For the Petitioner : Mr. Somik Deb, Advocate. For the Respondents : Mr. C S Sinh .....

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lity to pay service tax on the services provided by the petitioners of providing goods transport services etc. lies upon the assessee which is the service receiver and not the service provider and, therefore, the FCI has wrongly deducted the service tax from the contractual amount and the same should be ordered to be refunded to the petitioners. 4. The stand of the FCI is that in terms of the agreement entered into between the parties, the contractor has undertaken to pay these liabilities and u .....

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ice providers and their agents providing goods transport services, the assessee is now the service receiver and this amendment is effective from 1997. Therefore, there can be no manner of doubt that the assessee for all intention and purposes would be the Food Corporation of India. 6. We may only refer to the following observations of the Apex Court in Gujrat Ambuja Cement Vs. Union of India, (2005) 4 SCC 214 which read as follows : 20. As we read the decision in Laghu Udhyog Bharati, the basis .....

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n 66 spoke of the liability to pay tax in respect of services "which are provided to any person by the person responsible for collecting the service tax" and Section 65(5) defined "assessee" as meaning "a person responsible for collecting the service tax", that this Court held that sub-clauses (xii) and (xvii) of Rule 2(1) (d) of the Service Tax Rules were illegal. 21. As is apparent from Section 116 of the Finance Act, 2000, all the material portions of the two sec .....

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) is concerned by virtue of the proviso added in 2003, the persons availing of the services of goods transport operators or clearing and forwarding agents have explicitly been made liable to pay the service tax. 22. As we have said, Rule 2(1)(d) (xii) and (xvii) had been held to be illegal in Laghu Udhyog Bharati only because the charging provisions of the Act provided otherwise. Now that the charging section itself has been amended so as to make the provisions of the Act and the Rules compatibl .....

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able. Those issues are considered separately. On the first question, we hold that the law must be taken as having always been as is now brought about by the Finance Act, 2000. The statutory foundation for the decision in Laghu Udhyog Bharati has been replaced and the decision has thereby ceased to be relevant for the purposes of construing the present provisions (vide Ujagar Prints (II) vs. Union of India) . Therefore subject to our decision on the question of the legislative competence of Parli .....

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t in Rashtriya Ispat Nigam Ltd. Vs. M/S Dewan Chand Ram Saran, (2012) 5 SCC 306. We may, however, point out that in that case the contracts were entered into in the year 1998 and the Apex Court held that the intention of the parties was to shift the burden of taxes from the assessee to the person who is now liable to pay the taxes. The Apex Court reiterated the law laid down in Gujrat Ambuja Cement s case and held that in view of the amendment of the law it is the service receiver who is liable .....

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may be required by law to deduct shall be deducted at source and the same shall be paid to the Tax Authorities for the account of the Contractor and the Company shall provide the Contractor with required Tax Deduction Certificate. Interpreting the said Clause the Apex Court held thus : 26. As far as the submission of shifting of tax liability is concerned, as observed in paragraph 9 of Laghu Udyog Bharati (Supra), service tax is an indirect tax, and it is possible that it may be passed on. There .....

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cepting that after the amendment of 2000 the liability to pay the service tax is on the appellant as the assessee, the liability arose out of the services rendered by the respondent to the appellant, and that too prior to this amendment when the liability was on the service provider. The provisions concerning service tax are relevant only as between the appellant as an assessee under the statute and the tax authorities. This statutory provision can be of no relevance to determine the rights and .....

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out of the obligations under the contract, there was no need to make such a provision in a bilateral commercial document executed by the parties, since the respondent would be otherwise also liable for the same. In Bank of India (supra) one party viz. the bank was responsible for the formulation of the Voluntary Retirement Scheme, and the employees had only to decide whether to opt for it or not, and the principle of contra proferentem was applied. Unlike the VRS scheme, in the present case we a .....

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ilar clause was considered by this Court in the case of Numaligarh Refinery Ltd. vs. Daelim Industrial Co. Ltd., reported in [2007 (8) SCC 466]. In that matter, the question was as to whether the contractor was liable to pay and bear the countervailing duty on the imports though this duty came into force subsequent to the relevant contract. The relevant clause 2(b) read as follows: 2(b) All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility .....

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e the tenders are liable to be ignored. The tenderers should not incorporate any condition in the tenders as conditions of tenders are likely to be ignored. Dealing with this clause the contention of Mr. Somik Deb learned counsel for the petitioner is that what this clause contemplates is that the liability which is that of the contractor shall be borne by him and the liability which is that of the Corporation shall be borne by it. He, therefore, contends that since now the law is clear that the .....

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