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2016 (3) TMI 1002 - GUJARAT HIGH COURT

2016 (3) TMI 1002 - GUJARAT HIGH COURT - TMI - Recovery of Service tax from service recipient - Petitioner contended that Corporation has accepted compromise formula so it now cannot recover any additional charges, either in the guise of service tax or escalation clause - Held that:- the offer letter does not make any mention of service tax and must therefore be seen out side of such an offer. What is concluded refers to the rental charges and not the service tax. The offer letter is silent and .....

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sh computation of liability. - Decided against the petitioner - SPECIAL CIVIL APPLICATION NO. 12263 of 2015 - Dated:- 17-3-2016 - MR. AKIL KURESHI AND MR. Z.K. SAIYED FOR THE PETITIONER : MR DIPEN DESAI, ADVOCATE FOR THE RESPONDENT : MR MAULIK G NANAVATI, ADVOCATE, NOTICE SERVED BY DS ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has prayed for a direction to the respondents to release an amount of security deposit of ₹ 39.85 lacs (round about) with interest. .....

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r zones. For Zone No.1 the contract period was three years commencing from 27.10.2009. For Zone No.2 the contract period was three years commencing from 18.3.2010. For Zone No.3 the contract period was three years commencing from 17.10.2011 and for Zone No.4 the contract period was three years commencing from 20.09.2011. 3. During the course of such period serious disputes arose between the petitioner and the Corporation. The Corporation therefore passed an order dated 17.8.2012 and terminated t .....

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sentation. The petition was disposed of on 9.11.2012 accordingly. 5. The petitioner filed writ petitions being Special Civil Application Nos.16743 and 16744 of 2012 and again questioned the legality of the order of the Corporation of premature termination of the contract with respect to zones No.3 and 4, since by then the period of contract for zones No.1 and 2 had already come to an end. In such petitions the High Court on 20.12.2012 while issuing rule making it returnable on 28.1.2013 gave fol .....

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f the order passed by the Corporation terminating the contracts and with the further direction not to obstruct the petitioner from placing advertisements on the electric poles on all four zones. 7. The petitioner filed yet another petition being Special Civil Application No.3737 of 2013 questioning the action of the Corporation to invite fresh tenders for the same purpose. The interim relief earlier granted by the High Court continued from time to time till in a common order dated 9.4.2013 came .....

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. This order was clarified by the High Court by a further order dated 13.8.2013 that the stay against tenders for advertisements for zones No.1 and 2 does not survive. However, regarding fresh tenders for zones No.3 and 4 the Court deferred its decision for a later date. At that stage, it was conveyed by the counsel for the Corporation that the Corporation may consider withdrawing the order of termination so that contractor be continued enabling the Corporation to earn revenue. 9. When such lega .....

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f ₹ 14.06 lacs (round about). He had shown willingness to withdraw all proceedings. It was pointed out that tenders were invited for other zones for which highest offer of ₹ 16.51 lacs was received. He therefore suggested that if this dispute can be resolved, the Corporation can start earning monthly income of ₹ 16.51 lacs. He, therefore, recommended that all proceedings be resolved. The petitioner may withdraw the petitions and pending suits. The Corporation may drop the black .....

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nish Bhardwajji, The Municipal Commissioner, Vadodara Municipal Corporation Vadodara Settlement proposal in SCA Nos.1674244/ 12 and 3737/13 Respected Sir, In connection with SCA Nos.1674216744/ 2012 and SCA No.3737/13, we submit the following proposal for your consideration : (i) For Zone 3, we shall pay rent of ₹ 375/per month per pole for a total of 1036 poles for the period 17.10.11 to 17.8.12 and again for the period 22.1.13 to 9.4.13. (ii) For Zone 4, we shall pay rent of ₹ 375/ .....

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you to adjust the amount payable by us against the same and intimate us if there is any difference amount to be paid by us. If the amount of security deposit is in excess of what has to be paid by us, we trust that you would refund the same to us. Our contracts for Zone 3 and Zone 4 have been terminated by the Corporation. Presently there is no stay of the court on the said termination orders. We would request you to kindly cancel the contract by mutual consent. We shall withdraw our petitions f .....

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en up for further hearing on 23.8.2013. The Court therefore disposed of all the petitions in the following terms : Special Civil Application No.3737 of 2013 is pertaining to issuance of fresh tender notice. Special Civil Applications No.16742 of 2012, 16743 of 2012, and 16744 of 2012 pertain to termination of contract. Learned advocate Mr.Maulik G. Nanavati places a photocopy of Page 8 of 17 HC-NIC Page 8 of 17 Created On Tue Mar 29 15:29:50 IST 2016 C/SCA/12263/2015 JUDGMENT communication dated .....

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aid communication dated 21.08.2013, which is under his signature. 3. In view of the fact that the proposal made by the petitioner is accepted by the respondentCorporation, the petitioner does not have any surviving grievance at this stage. In view of that the Special Civil Applications are not pressed. The same are disposed of accordingly. Rule is discharged. Interim relief is vacated. No order as to cost. 4. Consequently, Civil Applications No.1947 of 2013 in Special Civil Application No.16743 .....

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ad to file the present petition. The central controversy that arises in this fresh round of litigation is with respect to the precise terms of the agreement between the petitioner and the Corporation. According to the Corporation, the previous sum of ₹ 14.06 lacs of unpaid license fees did not take into consideration the period upto 9.4.2013 till which the petitioner enjoyed interim relief from the High Court against the Corporation disturbing the petitioner s exhibition of advertisements .....

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ges that the petitioner agreed to pay to the Corporation for compromise, the petitioner must pay further rental charges on the basis of price escalation and service tax. According to the petitioner, the sum payable under the said offer letter dated 21.8.2013 which was accepted by the Corporation comes to ₹ 13,62,770/. According to the petitioner, therefore the Corporation should after adjusting such sum from the security deposit of ₹ 53,49,298/should refund the rest i.e. ₹ 39,8 .....

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ry of this Court a sum of ₹ 25 lacs. 13. Learned counsel Mr.Dipen Desai for the petitioner submitted that the petitioner had given offer in writing upon which the petitioner would compromise all the disputes and withdraw all the proceedings initiated by the petitioner against the Corporation. The Corporation had accepted such compromise formula. It now cannot recover any additional charges, either in the guise of service tax or escalation clause. On the other hand, Mr.Maulik Nanavati for t .....

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charges at the base rate. 14. We must split the consideration of the rival contentions in two parts. First one would be with respect to recovery of revised charges as per escalation clause. It is undisputed that the contract contained provision for revising the rental charges every year for the total period of three years of contract. Nevertheless, it is not unknown to law that the parties can come to terms independent of what may have been initially agreed. If out of free will and with consciou .....

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nviting fresh tenders for advertisement. The petitioner had also obtained injunction against termination of contract and against the Corporation inviting fresh tenders. It was for this reasons that, as noted above, the Commissioner put a detailed note before the Standing Committee suggesting that the Corporation is losing revenue of ₹ 16.51 lacs every month. If the petitioner therefore withdraws all proceedings, the Corporation may consider dropping the blacklisting and releasing the secur .....

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to reject the offer or make a counter offer which the petitioner would or would not have accepted. However, the Corporation having accepted the written offer of compromise made by the petitioner, now cannot read an escalation clause out side of such compromise formula. This is so because the petitioner had conveyed in black and white the rate at which the rental charges would be recoverable by the Corporation during the period specified in such offer letter. The offer of the petitioner was unamb .....

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uch reasons the Corporation in its conscious decision accepted the petitioner s offer of payment of rent at specified rate in view of which the petitioner would withdraw all the proceedings against the Corporation, the Corporation now cannot apply another formula for computing the unpaid rental charges. 19. This discussion would cover rentals for zones No.3 and 4 only where during the currency of the contract period High Court had granted interim protection and rental charges have remained unpai .....

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ervice tax and must therefore be seen out side of such an offer. What we have concluded above refers to the rental charges and not the service tax. The offer letter is silent and refers to rental payable by the petitioner to the Corporation. If other than the rental charges, there is any other tax liability upon the petitioner, he must separately pay the same. Under the circumstances, the Corporation must be allowed to recover such charges on the computation of unpaid rentals to be paid by the p .....

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