IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 12171 of 2004(Y)
1. M/S. RAJA TRANSPORTS, TRANSPORT
... Petitioner
Vs
1. UNION OF INDIA, REPRESENTED BY
... Respondent
2. THE COMMISSIONER OF CENTRAL EXCISE,
3. M/S. MALABAR CEMENTS LTD.,
For Petitioner :SRI.K.JAJU BABU
For Respondent :SRI.DINESH R.SHENOY, ADDL.CGSC
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :22/10/2008
O R D E R
S. Siri Jagan, J.
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W. P (C) No. 12171 of 2004
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Dated this, the 22nd October, 2008.
J U D G M E N T
The petitioner is a transporting contractor. They executed
certain works on behalf of the 3rd respondent Company, which is a
Government Company. In respect of the said service, service tax was
originally demanded. This Court set aside that demand. The matter
went up to the Supreme Court and the judgment of this Court was
confirmed. However, in the meanwhile, the statute was amended
with retrospective effect by which service tax became payable in
respect of the service provided by the petitioner to the 3rd respondent.
The 3rd respondent paid the service tax to the 2nd respondent.
However, by Exts.P. 5 and P7, the 3rd respondent deducted the service
tax paid by them to the 2nd respondent from the petitioner. The
petitioner is challenging Exts.P 5 and P7 demands and seeking the
following reliefs:
“i) Issue a writ of certiorari or other appropriate writ, order or
direction, calling for the records leading to Exts.P 5 and P7 and
quash the same;
ii) issue a writ of mandamus or other appropriate writ, order
or direction, directing the 3rd respondent to refund the amount
recovered from the petitioner as per Exts.P 5 and P7 with interest
forthwith;
iii) declare that as per Ext. P8 the petitioner is not liable to pay
the Service Tax demanded as per Exts.P 5 and P7.”
2. The contention of the petitioner is that the liability to pay
service tax is squarely on the 3rd respondent and therefore without a
contract enabling them to deduct that liability from the petitioner,
the same cannot be recovered from the petitioner. The petitioner
points out that in Ext. P1 contract, there is no such provision for
recovery of service tax from the petitioner. That being so, there is no
contract between the petitioner and the 3rd respondent enabling the
3rd respondent to recover the service tax paid by them from the
W.P.C. No. 12171/2004 -: 2 :-
petitioner, is the contention raised.
3. The 2nd respondent has filed a counter affidavit in which it is
categorically stated that the liability to pay service tax is squarely on
the 3rd respondent. This is not disputed by the 3rd respondent also.
What the 3rd respondent submits is that earlier also, the amounts were
deducted from the petitioner which the petitioner paid and therefore
the petitioner cannot now raise a dispute in regard to subsequent
deductions also. The second contention is that as per the contract,
although there is no specific condition therein, the 3rd respondent has
a right to recover service tax from the petitioner.
4. I have considered the rival contentions in detail.
5. As I have already stated, the 2nd respondent has stated that
the liability to pay service tax is clearly on the 3rd respondent which
the 3rd respondent does not dispute. Statutory liabilities due from a
party to a contract cannot be recovered from the other party to the
contract unless the terms of the contract specifically authorise that
party to the contract to do so. Here, admittedly, Ext. P1 is the terms
of the contract, which does not provide for recovery of service tax
from the petitioner. Therefore, the contention that as per the
contract, the 3rd respondent can recover service tax from the
petitioner cannot be sustained.
6. So far as the other contention is concerned, the petitioner
had in fact objected to the recovery by Ext. P2. Of course, by Ext. P3,
the 3rd respondent had reiterated their right to recover service tax
from the petitioner. But, counsel for the petitioner points out that in
Ext. P3, it is specifically stated that there is a stay by the High Court
which is the reason cited for refusing to refund the same. Whatever
that be, in so far as there is no estoppel in the matter, the petitioner
cannot be prevented from seeking refund of the amount illegally
W.P.C. No. 12171/2004 -: 3 :-
collected from them. In the above circumstances, I do not find any
merit in the contentions raised by the 3rd respondent. That being so,
the petitioner is entitled to refund of the amounts recovered from
them as service tax by the 3rd respondent, which is their liability.
Accordingly, there would be a direction to the 3rd respondent to
refund the amounts covered by Exts.P 5 and P7 to the petitioner
within two months from the date of receipt of a copy of this judgment.
Counsel for the petitioner prays for a direction to pay interest also. I
am not inclined to direct payment of interest in the peculiar facts and
circumstances of the case. The writ petition is allowed as above.
S. Siri Jagan, Judge.
Tds/