TMI Blog2021 (6) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ost factor, profit margin and tax component(TNVAT and Excise Duty). There can also be no doubt that during the relevant time, rate of tax was 2% for civil works contract and 5% for other works contract. There is again no doubt that it has now been enhanced to 12% under the GST. The Government itself has taken a policy decision that this additional tax burden will have to be borne only by the purchaser and not by the contractor. The petitioner's counsel made it clear that the petitioner should not be saddled with tax liability. When the petitioner entered into an agreement with the respondent Board, the contract price comprised three components, namely, cost factor, profit margin and tax component. There cannot be any contest regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es came to be taxed at 12%. Since the tax regime had undergone a change, it became necessary to re-work the terms of the contract. 4. The Government of Tamil Nadu considered the prevalent situation and issued G.O.Ms.No.296 Finance (Salaries) Department, dated 09.10.2017. The Government took note of the fact that the price bid to be quoted should be inclusive of taxes and duties. The supplier, while raising bills and tax invoice post-GST, will now have to collect GST from the purchaser at revised rates of notified percentage of value of supply and remit the same to the respective Government. The entire GST on the supply will have to be finally borne by the purchaser. 5. Now the question was how to work it out. The Government came ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the example above, the supplier states that the Central Excise Duty is ₹ 1 lakh and VAT or CGST is ₹ 1 lakh, after checking the reasonability of his claim, the subsumed tax may be arrived at ₹ 2 lakh. c. The estimate of subsumed tax should also be worked out independently from the departmental estimates. Revised Schedule of Rate (SOR) showing basic price and tax components separately are being issued by the Public Works Department. Using the revised SOR, revised departmental estimates for the work without subsumed tax shall be arrived as per normal procedure. The difference between the departmental estimates arrived using earlier SOR with taxes would constitute value of subsumed tax in the value of work. For instance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was in fact entered into between the parties and the petitioner having signed the same with eyes wide upon, cannot now seek to wriggle out of the consequences flowing therefrom. She also contended that the issue essentially turns on interpretation of the contract and therefore, this Court should be loath to interfere. In any event, the respondent Board has taken note of only on the changes effected by the GST Regime and is settling the writ petitioner's bills accordingly. She called for dismissal of the writ petition. 8. I carefully considered the rival contentions and went through the materials on record. 9. The agreement between the parties was entered into on 25.01.2016. The nature of work was to provide Under Ground Sew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quotation in the instant case was on itemwise basis. 10. The petitioner's counsel draws my attention to the order dated 01.08.2019 passed by the Principal Seat in W.P.Nos.21196 and 21198 of 2019. The writ petitioner herein was the writ petitioner in those cases. The petitioner had entered into a contract with Salem City Municipal Corporation. After analysing the terms of the contract, the writ petitions were disposed of by holding that the parties will be covered by paragraph Nos.10(a) and 12 of G.O.Ms.No.296, Finance(Salaries) Department, dated 09.10.2017. The case on hand is of no different. 11. For the sake of clarity, let me visualise a hypothetical situation. If for laying a pipeline, the cost factor and the profit margin o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by paragraph 10(a) and paragraph 12 of aforesaid G.O.Ms. No.296, Finance (Salaries) Department, dated 09.10.2017. 22. The exercise of quantification qua para 10(a) shall be completed by both the parties as expeditiously as possible within 12 weeks from the date of receipt of a copy of this order. Though obvious it is made clear that work under the aforesaid contract shall continue without being impeded by this exercise. 14. Since the case on hand is similar, I direct respondent Board to calculate the tax component in the contract price and rework the same in terms of paragraph No. 10(a) of G.O.Ms.No.296, Finance(Salaries) Department, dated 09.10.2017. 15. At this stage, the learned Standing counsel would draw my attention to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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