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National Highways Authority of India Versus M/s JSC Centrodorstroy

2016 (4) TMI 801 - SUPREME COURT

Whether increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to terms of the contract and performance under the Contract is certainly a possible view. - Appellant submitted that only those claims which were constructional inputs alone would be eligible to be covered under Clause 70 of COPA. Also the service tax on bank guarantee could have been avoided by the claimant, if the bank guarantee was replaced by tendering cash and that the facil .....

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e money advanced to the respondents. In his submission, furnishing a performance bank guarantee @ 10% of the contract price was a mandatory condition of the contract under Clauses 10.1 and 10.2 of COPA. Though at some stage the option of performance bond was mentioned in COPA, such option was withdrawn making performance security to be compulsorily in the form of an unconditional bank guarantee. Such requirement being directly referable to essential conditions and arising out of the terms of the .....

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e person could do, no interference by Court is called for. Viewed thus, we do not see any reason or justification to interfere in the matter. The view that the increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to terms of the contract and performance under the Contract is certainly a possible view. - Decided against the appellant - Civil Appeal No. 2529 of 2016 (Arising out of SLP (Civil) No. 9223 of 2014), Civil Appeal No. 2530 of 2016 (Ar .....

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S) 588 of 2013 are dealt with in detail. 2. Contract No.TNHP/2, Construction Package II-C for a contract price of ₹ 295.53 crores for executing the work of 4-laning and strengthening of the existing 2 lanes sections between km 38 to km 115 on National Highway- 2 in Uttar Pradesh was awarded to the Respondent on 12.03.2001. 3. Clause 14.3 of Instruction to Bidder was as under:- All duties, taxes and other levies payable by the Contractor under the contract, or for any other cause, as of the .....

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effect of Subsequent Legislation was as under:- Clause 70.8: Subsequent Legislation If, after the date 28 days prior to the closing date for submission of bids for the Contract there are changes to any National or State Statute, Ordinance, Decree or other Law or any regulation or by-law of any local or other duly constituted authority or the introduction of any such State Statute, Ordinance, Decree, Law, regulation or by-law in India or States of India which causes additional or reduced cost to .....

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shall already have been taken into account in the indexing of any inputs to the Price Adjustment Formulae in accordance with the provisions of Sub-Clauses 70.1 to 70.7 of this Clause. 4. Disputes having arisen between the parties, the matter was referred to the Arbitral Tribunal. Two claims were raised by the respondent namely: (i) Dispute No. 1 Compensation for additional cost on account of increase in Service Tax on the Insurance Premium under the Insurance Policy for the Project. (ii) Dispute .....

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ax which would be collected by the Insurance Company along with premium chargeable. There being revisions in the rate of service tax from 5% to 10.30%, over a period of time, according to the claimant service tax paid in excess of 5% was reimbursible by the appellant under Clause 70.8 of COPA. Similarly, in terms of the Clause 10.1 of COPA, the respondent-claimant was required to furnish Bank Guarantee for due execution of the contract by way of performance security. Service tax in relation to t .....

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count of Service Tax paid by him at rates in excess of 5% of the premium paid. 6.2 The Claimant shall also be paid by the Respondent a sum of ₹ 11,22,811 towards interest on the above amount for period upto the date of this award i.e. 28.02.2013. 6.3 Post award interest shall be payable in addition, on the principal sum awarded of ₹ 11,34,877/- at the rate of 12% per annum from 01.03.2013 to the actual date of payment of amounts under pars 6.1 & 6.2 above. No post award interest .....

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on the above amount for period upto the date of this award i.e. 28.02.2013. 10.3 Post award interest shall be payable in addition on the awarded sum of ₹ 63,58,368/- at the rate of 12% per annum (simple) from the date of award to the actual date of payment of the said sum. No post award interest may, however, be paid in case the sums awarded under 10.1 and 10.2 above are paid within 90 days of the date of the award. 6. The award passed by the Arbitral Tribunal proceeds on the ground that .....

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osts are not payable separately if the same have already been taken into account in indexing of the inputs in Price Adjustment Formulae under Sub-clause 70.3. The Claimant has placed on record a letter dated 24.01.2008 from the Economic Advisor, Ministry of Commerce and Industry, confirming that Service Tax was not an input into indexing of Whole Sale Price Indices, used in India. 7. The award passed by the Arbitral Tribunal was challenged by the appellant by filing OMP No.623 of 2013 under Sect .....

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ss identical. In that matter identical claims were raised on two counts but arising out of a different contract by the very same claimant. The Arbitral Tribunal granted ₹ 8,84,969/- in respect of dispute no. 1 with interest @ 12% per annum under identical two heads as found in the earlier case. Similarly, in respect of dispute no.2, the Arbitral Tribunal awarded ₹ 42,35,385/- with interest @ 12% per annum. 9. In NHAI v. ITD Cementation India Ltd.(Supra) impact of Clauses 70.1 to 70.7 .....

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orities of India was negated. 10. The fact that there had been revision in the rates of service tax from time to time was not disputed by the appellant. Ms. Indu Malhotra, learned Senior Counsel appearing for the appellants in both the matters, however, submitted that only those claims which were constructional inputs alone would be eligible to be covered under Clause 70 of COPA. In her submission, the service tax on bank guarantee could have been avoided by the claimant, if the bank guarantee w .....

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