TMI Blog2024 (4) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... ed directly from the sub-vendors to the work site - barred under clause 31 of the General Conditions of Contract or not - Doctrine of Merger - HELD THAT:- The effect of deletion of the latter portion in clause 10.7 of the GCC shall be that the adjustment of GST component shall no longer be restricted to direct transactions between the Employer and the Contractor. The writ Court rightly held that clause 31 of the GCC cannot be read in a manner so as to obliterate the impact of the amended clause 10.7 of the GCC. Now having thus interpreted the different clauses under the GST, we say with certainty that the entitlement of the petitioner-Firms to claim the increase in the tax liability on the indirect transactions that underwent change in the course of the working of the contract is an enforceable right under section 64-A of the Sale of Goods Act, which can be denied only in the case of a contract to the contrary. Doctrine of Merger of High Court Decision with the Order of Supreme Court - HELD THAT:- When a Special Leave Petition is dismissed in limine the order passed by the High Court does not merge with the dismissal order passed by the Hon ble Supreme Court. This seems to be the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner-Firms are entitled for reimbursement of the GST along with statutory interest in terms of the GST Act, 2017 read with the Rules framed thereunder - Petition allowed. - HON BLE THE ACTING CHIEF JUSTICE SHREE CHANDRASHEKHAR, AND HON BLE MR. JUSTICE NAVNEET KUMAR For the Petitioners : Mr. Ajit Kumar Sinha, Sr. Advocate Mrs. Debolina Sen Hirani, Advocate Mr. Akshat Vachher, Advocate Ms. Kashyapi, Advocate Ms. Abhiti Vachher, Advocate [in W.P.T. Nos. 6471/2023, 6524/2023, 6529/2023 160/2024] : Mr. Ajit Kumar, Sr. Advocate Ms. Tanya Singh, Advocate [in WPT Nos. 6712/2023,7060/2023,7066/2023, 7069/2023, 7074/2023, 7076/2023 7079/2023] : Mr. Ajit Kumar, Sr. Advocate Mr. Rohitashya Roy, Advocate Mr. Vibhor Mayank, Advocate [in WPT No. 5773/2023,5291/2023, 5341/2023 5574/2023] : Mr. M.S. Mittal, Sr. Advocate Mr. Salona Mittal, Advocate Ms. Lavanya Gadodia, Advocate [in WPT No. 5720/2023, 5721/2023 5722/2023] For the Resp.-State : Mr. Rajiv Ranjan, Advocate General Mr. Ashok Kumar Yadav, Sr. S.C.-I Mr. Aditya Kumar, A.C. to Sr. S.C.-I Ms. Aparajita Chatterjee, Advocate Ms. Komal Tiwari, Advocate. For the Resp.-JBVNL : Mr. Manish Kumar, Sr. S.C. Ms. Nirupama, AC to Sr. S.C. PER, SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statutory requirement and on the other hand, the Respondent No. 2 is withholding the GST from the Petitioner's invoices. d) For issuance of an appropriate writ, order, or direction holding and declaring that the Petitioner is entitled for reimbursement of GST due to the fact that the Respondent No. 2 has deposited TDS on CGST and SGST @ 1% each of the Gross Value of GST invoices from the date of applicability i.e., 01.10.2018. e) For issuance of any other appropriate writ(s)/order(s)/directions(s) as Your Lordships may deem just and proper in the facts and circumstances of the case for imparting substantial justice to the Petitioner. 3. In W.P (T) Nos. 5720 of 2023, 5721 of 2023 and 5722 of 2023, Mr. M.S Mittal, the learned senior counsel advanced the arguments on behalf of M/s Anvil Cables Private Limited. W.P. (T) No. 5720 of 2023: (i) For issuance of an appropriate writ, order or direction, including a writ in the nature of declaration, declaring the action of the Respondent JBVNL in withholding amount of GST impact of Rs. 8,32,93,388.43 in respect of the Giridih Project under the Din Dayal Upadhyay Gram Jyoti Yojna while paying bills from the month of July, 2017, is whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held amount from various bills of the petitioner from the initiation of the work i.e. 09.03.2016 till the completion of work i.e. 30.06.2019. iii. For holding and declaring that in view of the terms and conditions contained in the Bid document, the Petitioner is entitled for impact of GST along with interest from March 2016 onwards, since the GST liability has been discharged by the Petitioner out of its own pocket and can be viewed on the State GST Portal, thus, doubly penalizing the petitioner i.e., on one hand, the petitioner is regularly depositing the GST amount as a statutory requirement and on other hand, the Respondent is withholding the GST amount from the Petitioner's tax invoice. iv. For holding and declaring that the Petitioner is entitled for reimbursement of GST amount due in view of the fact that Respondent have deposited TDS on CGST and SGST @ 1% each of gross value of GST invoice from the date of applicability i.e. from 01/09/2018. AND/OR The petitioners pray for issuance of any other appropriate writ(s), order(s), Direction(s) for which the petitioner is found legally entitled to and also for doing conscionable justice to the petitioners. 5. Mr. Rohitashya Roy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Nigam (in short, JBVNL). The facts in brief are that for the rural electrification under the Dindayal Upadhyay Gram Jyoti Yojna (in short, DDUGJY), the bids were invited by the JBVNL on different dates and the petitioner-Firms were selected for the implementation of the scheme. As per clause 10.7 and clause 31 of the GCC, any increase in the price of the indirect transactions on account of a change in the tax regime was to be borne by the Contractor as the price quoted thereon was inclusive of the taxes. The direct transactions are confined to the purchase of materials by the JBVNL directly from the petitioner-Firms whereunder the price quoted is exclusive of taxes. The other transactions labeled as indirect transactions included the bought-out items and the materials procured by the petitioner-Firms from the other vendors and sold to the JBVNL. As the transactions involved in the implementation of the rural electrification works fell under the definition of supply as defined under section 7(1) of the GST Act, the concerns about the differentiation made between the direct and indirect transactions were raised from time to time. The REC issued a circular on 30th June 2016 which cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Special Leave Petition (Civil) Diary No(s). 35251 of 2023 and that was dismissed observing as under: Delay condoned. Having heard the learned senior counsel for the petitioners as also the learned senior counsel for the respondents, keeping in view the factual aspects involved in the instant case, we see no reason to interfere. However, on the larger issue relating to the question of law which has been raised, the same is left open to be considered if it arises in an appropriate fact situation. Petition(s) stand(s) disposed of along with the pending application(s), if any. 9. Mr. Ajit Kumar Sinha, the learned senior counsel appearing for the East India Udyog Limited submits that the order passed by a co-ordinate Bench of this Court in M/s Techno Electric and Engineering Company Limited was affirmed by the Hon ble Supreme Court after an adjudication on facts and while so the findings recorded in the said case cannot be re-opened in the present proceeding. According to the learned senior counsel, this batch of the writ petitions involves identical set of facts and issues and therefore the judgment of the co-ordinate Bench in M/s Techno Electric and Engineering Company Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its obligations under the Contract However, these adjustments would be restricted to direct transactions between the Employer and the Contractor and not on procurement of raw materials, intermediary components etc. by the Contractor for which the Employer shall be the sole judge. Notwithstanding the foregoing, such additional or reduced costs shall not be separately paid or credited if the same has already been accounted for in the price adjustment provisions where applicable, in accordance with the Appendix-2 to the Contract Agreement. 12. Clause 31 of the GCC provides that the adjustments on account of any law, regulation, ordinance order or by-law having been enacted seven days before the bid opening date, or abrogated, or changed that subsequently affects the cost and expenses of the contract and/or the time for completion, shall be restricted to direct transactions between the Employer and the Contractor. In converse, clause 31 bars any adjustment to the Contractor on the procurement of raw materials, intermediary components etc. The unamended clause 10.7 of the GCC also referred to the increase or decrease in tax or introduction of a new tax, or the abolition of an existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troduction of a new Tax or abolition of an existing Tax in the course of the performance of the Contract. 14. The unamended clause 10.7 of the GCC contemplated the introduction of GST in the course of performance of the contract and therefore it was provided in clause 10.7 that in the event of introduction of GST in the course of performance of the contract, PIA shall examine its impact on the affected transactions under the contract in totality for equitable adjustment in the contract price, if required. Before the amendment, clause 10.7 was in sync with clause 31 and both provided that the adjustment on account of the introduction of GST in the course of performance of the contract was restricted to direct transactions between the Employer and the Contractor for which the taxes and duties were reimbursable by the Employer. This is plain reading that what is provided under clause 31 of the GCC was also incorporated under clause 10.7 which contained a restrictive covenant to the effect that the adjustments to be made on account of change in the existing tax structure shall not be applicable to the procurement of raw materials, intermediary components etc. by the Contractor and shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefrom, as the case may be, in accordance with GCC Clause 31 (Changes in Laws and Regulations) hereof. In the event of introduction of GST in the course of performance of contract, PIA shall examine its impact on the affected transactions under the contract in totality, for equitable adjustment in the contract price, if required. The contractor shall furnish the relevant details/documents for this purpose, as may be required by PIA. 17. However, the learned Advocate General contends that as regards adjustments in the contract price clause 31 of the GCC shall guide and regulate the provision under clause 10.7 even after the amendment thereto. The rule ex antecedentibus et consequentibus fit optima interpretation which means the deed must be read as a whole in order to ascertain its true meaning is of vintage origin. In Throcmerton [Throcmerton v. Trucey : (1585) 1 Plow. 145, 161] the Court observed that the contract as a whole has to be considered. More than a century thereafter, Lord Watson [Chamber Coillery v. Twyerould (1893) : [1915] 1 Ch. 268n., 272] said I find nothing in this case to oust the application of the well-known rule that a deed ought to be read as a whole to asce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of interpretation of the contract and, we do not see any reason to differ with the reasoning of the co-ordinate Bench as to the effect of clause 31 in the amended clause 10.7 of the GCC. In McDermott International [McDermott International v. Burn Standard Co. Ltd. : (2006) 11 SCC 181] the Hon ble Supreme Court held that the terms of the contract can be expressed or implied and the conduct of the parties would also be a relevant factor in the matter of construction of a contract. After the amendment in clause 10.7, the JBVNL started paying the GST impact on whole of the contract including the indirect transactions and that demonstrates its correct understanding of the effect of the amendment in clause 10.7 but without any plausible and acceptable reason it had stopped/withdrawn the GST impact on the indirect transactions; a change in the political regime or the bureaucracy should not bring a change in the understanding in law. 19. Still, the learned Advocate General endeavored to support his submission with reference to the letters dated 30th June 2016 and 5th June 2018 from the REC to the Project Implementing Agency, that clause 31 which was not omitted from clause 10.7 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (which shall be deemed to include any change in interpretation or application by the competent authorities) that subsequently affects the costs and expenses of the Contractor and/or the Time for completion, the Contract Price shall be correspondingly increased or decreased, and/or the Time for Completion shall be reasonably adjusted to the extent that the Contractor has thereby been affected in the performance of any of its obligations under the Contract. However, these adjustments wouldd be restricted to direct transactions between the Employer and the Contractor and not on procurement of raw materials, intermediary components etc. by the Contractor for which the Employer shall be the sole Judge. Notwithstanding the foregoing, such additional or reduced costs shall not be separately paid or credited if the same has already been accounted for in the price adjustment provisions where applicable, in accordance with the Appendix-2 to the Contract Agreement. In this connection, it is clarified that in the event of introduction of GST in the course of performance of contract, PIA stall examine its impact on the affected transactions under the contract in totality for equitable adjustmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or s works to site. In respect of raw materials, intermediary components etc. and bought out items, neither the Employer nor the Contractor shall be entitled to any claim arising due to increase or decrease in the rate of Tax introduction of a new Tax or abolition of an existing Tax in the course of the performance of the Contract. Unquote Clause No. 31.1 of 31 (change in laws and Regulations) Quote If, after the date seven (07) days prior to the date of Bid opening any law regulation, Ordinance, Order or by-law having the force of law is enacted promulgated, atrogated or changed in India (which shall be deemed to include any change in interpretation of application by the competent authorities) that subsequently affects the costs and expenses of the Contractor and/or the Time for Completion, the Contract Price shall be correspondingly increased or decreased and/or the Time for completion shall be reasonably adjusted to the extent that the Contractor has thereby been affected in the performance of any of its obligations under the Contract. However, these adjustments would be restricted to direct transactions between the Employer and Contractor and not on procurement of raw materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire contract. 23. Simply put, the effect of deletion of the latter portion in clause 10.7 of the GCC shall be that the adjustment of GST component shall no longer be restricted to direct transactions between the Employer and the Contractor. The writ Court rightly held that clause 31 of the GCC cannot be read in a manner so as to obliterate the impact of the amended clause 10.7 of the GCC. Now having thus interpreted the different clauses under the GST, we say with certainty that the entitlement of the petitioner-Firms to claim the increase in the tax liability on the indirect transactions that underwent change in the course of the working of the contract is an enforceable right under section 64-A of the Sale of Goods Act, which can be denied only in the case of a contract to the contrary. 24. In M/s Techno Electric and Engineering Company Limited , this Court held as under: 11. From the Pre-bid Clarification dated 06-09-2016 and the Clause 28 of Letter of Award dated 09-06-2017 the intentions of the parties are clear that in the event of introduction of GST in the course of performance of contract, PIA shall examine its impact on the affected transactions under the contract in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arification, now at this stage, the licensee cannot take a U-Turn by not paying the GST impact. At this stage it is relevant to observe that as per the agreed terms, after introduction of GST, the Respondent No. 2 started paying /reimbursing amounts of GST impact on affected transactions in totality i.e., direct transactions between Employer and Contractor as well as indirect transactions (bought out items) which continued up to August, 2019, up till execution of 80% of the work. However, all of a sudden, without even informing the petitioner, withheld amount of GST impact while paying bills from the month of September, 2019 and also started recovering the same. As a matter of fact, the Respondent No. 2 never informed Petitioner till date the reasons for withholding of GST amount or that they are releasing GST payment as indirect transactions/bought out item provisionally. 13. The contention of the Respondent No. 2 that the GST was reimbursed as indirect transaction provisionally is extraneous and does not bear out from the agreed terms but the Respondent No. 2 remained silent. In the case of Mahabir Auto Stores Vs Indian Oil Corporation reported in (1990) 3 SCC 752 it is held by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, both the clauses are seen supporting and complementing each other, which have been just re-iterated in the REC'S Letter dated 30-06-2016. 15. With regard to the contention of the Respondents on the question of maintainability; now it is well settled that the writ in contractual matters against public authority or instrumentality or agencies of state are State within the meaning of Article-12 of the Constitution of India and hence are maintainable. Now the law is no more res integra, even in contractual matters the writs would maintainable against the Government or instrumentality or agencies of the Government. Even in cases of money claim writ against State within the meaning of Article 12 of the Constitution of India would be maintainable. In the case at hand, the acts and actions of the Respondents are in derogation to the Article 14, 19(1)(g), 21 and 300A of the Constitution of India. In the case of UOI Vs. Tantia Construction Pvt. Ltd reported in (2011) 5 SCC 697 it is held by the Hon ble Supreme Court that writ in contractual matters would be maintainable even if there is an arbitration clause as alternative remedy is not a bar. Recently, the Hon ble Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imant of the guarantee under Article 14 of the non-arbitrariness at the hands of the State in any of its action. Every State action in order to survive, must be susceptible to the vice of arbitrariness which is crux of Article 14 and basic to the rule of law, the system which governs us. Arbitrariness is the very negation of rule of law. Satisfaction of test of non-arbitrariness in every State action is sine qua non to its validity and in this respect the State cannot claim comparison of with private individual even in the field of contract Arbitrariness is anathema to State action in every sphere and wherever the vice percolates, the Court would not be impeded by technicalities to trace it and strike it down. This is the surest way to ensure the majesty of rule of law guaranteed by the Constitution of India. Every State action must be informed by reasons and it follows that an out uninformed by reason, is arbitrary. The same view was reiterated by the Hon ble Apex Court in the case of Food Corporation of India vs Kamdhenu Cattle Feed Industries, reported in (1993) 1 SCC 71. Recently, in the case of Papatrao Vyankatrao Patil Vs. The State of Maharashtra reported in (2020) SCC Onlin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Engineering Company Limited was dismissed in limine. However, what is contended on behalf of the petitioner-Firms is that in the identical set of facts there cannot be more than one decision governing the same subject-matter. 26. Aristotle said that the habit of lightly changing the laws is evil. Recently, Scarman, L.J. observed that: Consistency is necessary to certainty one of the great objectives of law [Tiverton Estates Ltd. v. Wearwell Ltd. : (1975) Ch 146] . Indeed, this is necessary to maintain discipline in the judicial system that a co-ordinate Bench follows the decision of another co-ordinate Bench. In Mahadeolal Kanodia [Mahadeolal Kanodia v. Administrator-General of W.B. : AIR 1960 SC 936] the Hon ble Supreme Court stressing the need for instilling certainty in the judicial system observed that if the judges of co-ordinate jurisdiction in a High Court start over-ruling one another s decisions the certainty in the system shall disappear. Shortly thereafter, in Lala Shri Bhagwan [Lala Shri Bhagwan v. Ram Chand : AIR 1965 SC 1767] , the Hon ble Supreme Court observed that if the learned Judge thinks that the earlier decision of the Court requires reconsideration, he shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 where amended clause 10.7 of the GCC was not incorporated in the Agreement. The stand of the JBVNL is that such petitioner-Firms cannot claim reimbursement of GST component over procurement of raw materials, intermediary components and bought-out items. According to the JBVNL, there is a set of seven writ petitions vide W.P (T) Nos. 5720 of 2023, 5721 of 2023 and W.P (T) No. 5722 of 2023 (filed by M/s Anvil Cables Private Limited); W.P (T) Nos. 6712 of 2023, 7060 of 2023 and W.P (T) No. 7066 of 2023 (filed by Sri Gopikrishna Infrastructure Private Limited) and; W.P (T) Nos. 160 of 2024 filed by East India Udyog Limited where the unamended clause 10.7 of the GCC shall apply. 28. M/s Anvil Cables Private Limited was given the Letter of Award on 5th February 2016 and 5th June 2016 for the districts of Giridih, Bokaro and Dhanbad. Similarly, Sri Gopikrishna Infrastructure Private Limited was awarded the contract for the districts of Koderma and Bokaro and issued LOA on 9th March 2016 for the district of Koderma and LOAs both dated 16th August 2016 for the district of Bokaro and for the district of Deoghar the LOA was issued on 14th February 2016. W.P (T) No. 160 of 2024 filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentations made to the JBVNL, and the response thereto by the JBVNL was that the matter is pending litigation. On the point of similarity of facts with M/s Techno Electric and Engineering Company Limited, suffice it would be to record that the NITs, GCCs, LOAs, and the GST clause introduced in the LOAs are the same. A pre-bid clarification letter dated 30th June 2016 was issued to all the Implementing Agencies for clarification on the statutory tax valuations upon the introduction of the GST. Now only because the NITs were floated on different dates or the LOAs or the Agreements were executed pre-GST regime, the benefit of GST reimbursement on indirect transactions under the amended clause 10.7 of the GST cannot be denied to such petitioner-Firms. The stand taken by the JBVNL that the pre-bid clarification which resulted in amendment in clause 10.7 and subsequent incorporation of clause 28 in the GCC shall not be available to the petitioner-Firms violates the basic norm of justice, equity and fair play. It is not disputed that the nature of the work awarded to the petitioner-Firms in both phases is the same and the execution of the work under the previous contracts was in progre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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