TMI Blog2019 (8) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... eral to make realization of the service tax from the bills of the petitioner by enforcement of the Bank Guarantee is justified? - HELD THAT:- It is not a case that while making payment of the bill of the petitioner, any amount was deducted by the Power Distribution Company rather having made payment for execution of the contract in question that when audit objection came they have chosen to enforce the Bank Guarantee to realize that amount of service tax which as per their own statement, was actually payable by them in terms of the notification bearing no. 30 of 2012 dated 20.06.2012 - Since this is purely a contractual dispute and requires interpretation of the terms of the contract, we leave it open for the parties to resolve the issue of payability before the appropriate forum. The respondents no. 2 to 4 are directed to remit the amount recovered within a period of eight weeks from today - petition allowed. - Civil Writ Jurisdiction Case No.14469 of 2017 - - - Dated:- 1-7-2019 - Mr. Justice Jyoti Saran And Mr. Justice Partha Sarthy For the Petitioner/s : Mr. D.V.Pathy, Adv. For the CGST CX : Mr. S.D.Sanjay, Sr. Adv., Mr. Alok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complained of by the petitioner, is not in execution of any adjudicatory order passed by the statutory authority under the Finance Act, 1994 regulating the scheme of service tax at the relevant time, it is only to be seen whether, the recovery is supported by the explanation given by Mr. Ojha, that the recovery of service tax was in the light of the agreement entered into between the petitioner and the Power Distribution Company and that the contractual amount payable to the petitioner by the Power Distribution Company was inclusive of taxes which would include the service tax amount. According to Mr. D. V. Pathy, learned counsel for the petitioner, in the nature of the contract entered into between parties, for executing a Centrally Sponsored Scheme, no service tax was payable and thus the respondent Power Distribution Company proceeding in recovering the tax on the audit objection had committed an illegality. As we have observed at the outset, the issue of admissibility of Service Tax on the contract executed by the petitioner, is yet to be initiated by the Service Tax Department. We would leave the discussion and determination on the issue at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it neither invited payment of service tax and even if it was payable, then it was to be done by the Power Distribution Company which would be independent of the value of the contract executed and could not have been deducted from the bills of the petitioner. It is submitted by Mr. Pathy that under the scheme of Service Tax Act the petitioner at best is a collecting agent but the liability of payment of service tax is on the service recipient. We find a fair admission by the Power Distribution Company in the supplementary counter affidavit at paragraph 9 in which they fairly admit that they were to share only 50% liability and which was inclusive in the bills raised by the petitioner. It is stated that this 50% amount has been realized from the petitioner and deposited with the Service Tax Department but the remaining 50% is to be paid by the petitioner from his own pocket. The statement made in paragraph 9 and 10 runs under: 9. That it is stated and clarified that under Reverse Charge Mechanism the liability of the South Bihar Power Distribution Company Ltd. was to the extent of 50% of the service tax and the remaining 50% is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on the issue, we are not required to express ourselves as to whether the contract executed by the petitioner was exigible to service tax and if the answer was Yes , then the extent of liability to be suffered by each of the party. We would leave such determination at the wisdom of the Department to come to a just conclusion on the issue obviously, in a duly constituted proceeding and on hearing the parties. While observing thus, we also express our anguish on the laid back attitude of the Service Tax Department in not coming forward to resolve the issue of taxibility as well as the fixation of liability, even when this matter is pending for last 2 years. We would now advert to the other issue and which is whether the act of the Power Distribution Company to mechanically proceed on the audit objection of the Accountant General to make realization of the service tax from the bills of the petitioner by enforcement of the Bank Guarantee is justified. It is not a case that while making payment of the bill of the petitioner, any amount was deducted by the Power Distribution Company rather having made payment for execution of the contract in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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