Kerala High Court
M/S.Sivasakthi Engineering & ... vs The Assistant Commissioner ...
Author: P.N.Ravindran
Bench: P.N.Ravindran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN
THURSDAY, THE 5TH DAY OF JULY 2012/14TH ASHADHA 1934
WP(C).No. 11905 of 2010 (K)
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PETITIONER(S):
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M/S.SIVASAKTHI ENGINEERING & FABRICATORS,
PSC POLECASTING YARD,POOLAMPARA,WALAYAR.P.O
PALAKKAD-678 624,REPRESENTED BY ITS MANAGING
PARTNER P.E.SUBRAMANIAM.
BY ADVS.DR.K.B.MUHAMED KUTTY (SR.)
SRI.K.M.FIROZ
RESPONDENT(S):
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1. THE ASSISTANT COMMISSIONER (ASSESSMENT),
SPECIAL CIRCLE,COMMERCIAL TAX DEPARTMENT, PALAKKAD.
2. THE KERALA STATE ELECTRICITY BOARD,
BOARD SECRETARIAT,VYDHYUTHI BHAVAN,PATTOM POST
THIRUVANANTHAPURAM-4,REPRESENTED BY ITS SECRETARY.
3. THE CHIEF ENGINEER (TC & M),THE KERALA
STATE ELECTRICITY BOARD,VYDYUTHI BHAVAN,PATTOM
POST,THIRUVANANTHAPURAM.
4. THE DEPUTY CHIEF ENGINEER,VYDYUTHI
BHAVAN,KERALA STATE ELECTRICITY BOARD, PALAKKAD.
R1 BY GOVT.PLEADER SRI.MANOJ P.KUNJACHAN
BY ADV. SRI.P.SANTHALINGAM, SC FOR KSEB
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
05-07-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
tss
W.P.(C) NO.11905/2010
APPENDIX
PETITIONER'S EXHIBITS:-
P1:- COPY OF THE PURCHASE ORDER DTD. 9.5.05.
P2:- COPY OF THE PURCHASE ORDER DTD. 30.5.05.
P3:- COPY OF THE PURCHASE ORDER DTD. 24.8.2005.
P4:- COPY OF THE PURCHASE ORDER DTD. 18.1.05.
P5:- COPY OF THE PURCHASE ORDER DTD. 8.8.05.
P6:- COPY OF THE PURCHASE ORDER DTD. 24.1.2006.
P7:- COPY OF THE PURCHASE ORDER DTD. 1.7.06.
P8:- COPY OF THE LETTER DTD. 1.12.2009 ADDRESSED TO THE IST RESPONDENT.
P9:- COPY OF THE STATEMENT SHOWING THE BALANCE OUTSTANDING TO THE
PETITIONER, NAMELY, RS.23,24,249/-
P10- COPY OF THE POSTAL ACKNOWLEDGMENT.
P11:- COPY OF LETTER DT. 6.4.2005 SUBMTITED BY THE PETITIONER TO THE IST
RESPONDENT.
P12:- COPY OF LETTER DTD. 18.4.2005 SUBMITTED BY THE PETITIONER TO THE IST
RESPONDENT.
P13:- COPY OF LETTER DTD. 19.5.2006 SUBMITTED BY THE PETITIONER TO THE IST
RESPONDENT.
P14:- COPY OF LETTER DT. 1.6.06 SUBMITTED BY THE PETITIONER TO THE IST
RESPONDENT.
P15:- COPY OF LETTER DTD. 18.7.2006 SUBMITTED BY THE PETITIONER TO THE IST
RESPONDENT.
P16:- COPY OF LETTER DT.D 10.1.07 SUBMITTED BY THE PETITIONER TO THE IST
RESPONDENT.
P17:- COPY OF THE LETTER TO THE 4TH RESPONDENT WITH THE ACKNOWLEDGMENT
THEREOF
P18:- COPY OF THE ANNUAL RETURN FOR THE YEAR 05-06.
P19:- COPY OF THE ANNUAL RETURN FOR THE YEAR 06-06.
tss
W.P.(C) NO.11905/2010
P20:- COPY OF THE LETTER DTD. 16.10.2004 ISSUED BY KERALA STATE ELECTRICITY
BOARD.
P21:- COPY OF THE LETTER DTD. 28.9.2010 ISSUED BY KERALA STATE ELECTRICITY
BOARD.
P22:- COPY OF THE TENDER DTD. 18.1.2005 ISSUED BY KERALA STATE ELECTRICITY
BOARD.
P23:- COPY OF THE LETTER DTD. 8.8.05 ISSUED BY KERALA STATE ELECTRICITY
BOARD.
P24:- COPY OF THE LETTER DT.D 24.1.2006ISSUED BY KERALA STATE ELECTRICITY
BOARD.
P25:- COPY OF THE LETTER DT. 11.7.2006 ISSUED BY KERALA STATE ELECTRICITY
BOARD.
RESPONDENT'S EXHIBITS:-
R3(a):- COPY OF THE PURCHASE ORDER NO.TCM . 57/2004-05/2345 DTD. 25.9.04.
R3(b):- COPY OF THE TENDER SUBMITTED BY THE PETITIONER .
R3(c):-COPY OF THE LETTER DTD. 25.5.05 SENT BY THE DEPUTY COMMISSIONER
(GENERAL) COMMERCIAL TAXES, THIRUVANANTHAPURAM TO THE 3RD RESPONDENT.
R3(d):- COPY OF THE BOARD ORDER (FB) 1834/05 (TA.34/TCM.7/04-05 /ACSR/GENERAL
DTD. 10.6.2005.
//TRUE COPY//
P.A. TO JUDGE
tss
P.N.RAVINDRAN, J.
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W.P.(C)No.11905 of 2010
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Dated this the 5th day of day of July, 2012
J U D G M E N T
By a tender notification dated 8.6.2004, the third respondent Chief Engineer invited tenders for the supply of Pre Stressed Concrete Poles (PSC poles for short) to meet the requirements of the Kerala State Electricity Board in Electrical Circle, Palakkad for the year 2004-
05. The petitioner, a manufacturer of Pre Stressed Concrete Poles participated in the tender by submitting Ext.R3(b) tender. The rate quoted by the petitioner was inclusive of excise duty (16% + 2% Cess on ED) and sales tax (4.6% including additional sales tax). The petitioner's offer was accepted and Ext.R3(a) purchase order dated 25.9.2004 was issued for a total quantity of 12,950 numbers of 7 metre poles, 11,100 numbers of 8 metre poles and 1,500 numbers of 9 metre PSC poles. It was stipulated in the purchase order that the petitioner's offer to supply ready made PSC poles to Electrical Circle, Palakkad is accepted at the all inclusive firm rates indicated thereunder. The rates were also given in the schedule to the purchase order. It was stipulated in paragraph 19 of the purchase order that the supplier (petitioner) shall be prepared to supply an additional quantity of upto 25% of the total ordered quantity at the WPC No.11905/2010 2 same rates, terms and conditions, if called upon to do so. The petitioner supplied the agreed quantity of PSC poles. The petitioner was also called upon to supply an additional quantity of poles for which separate purchase orders were issued in terms of paragraph 19 of Ext.R3(a) order. Exts.P1, P2 and P3 are some of the purchase orders thus issued.
2. When the tenders were invited and the petitioner made its offer, the Kerala General Sales Tax Act, 1963 was in force and at the relevant time, the sales tax payable on PSC poles was 4% in terms of a notification issued by the State Government in exercise of the power conferred on it under section 10 of the Kerala General Sales Tax Act, 1963. After Ext.R3(a) purchase order was issued and the petitioner started supplying the poles, the Kerala Value Added Tax Act, 2003 was enacted and brought into force with effect from 1.4.2005. After the Kerala Value Added Tax Act, 2003 was brought into force, the State Government issued G.O.(P) No.4/06/TD. dated 21.1.2006 in exercise of the power conferred on it under clause (d) of sub-section (1) of section 6 of the Kerala Value Added Tax Act, 2003, notifying a list of goods taxable at the rate of 12%. Since Pre Stressed Concrete Poles were not covered by any of the entries in the Schedules to the Kerala Value Added Tax Act, 2003, the said notification applied to Pre WPC No.11905/2010 3 Stressed Concrete Poles also. As a result, the tax payable was raised to 12.5%. Later, with effect from 1.4.2008, the Kerala Value Added Tax Act, 2003 was amended by incorporating the seventh proviso to section 6 (1)(f) of the Act wherein it is stipulated that where the sale of goods other than petroleum products, manufactured in the State is to Railways, Kerala State Electricity Board, Kerala State Road Transport Corporation or Kerala Water Authority, the tax payable under clause (d) of sub-section (1) of section 6 of the Act shall, subject to such conditions and restrictions as may be prescribed, be at 4%.
3. Many of the additional purchase orders were issued by the third respondent after the Kerala Value Added Tax Act, 2003 was enacted and brought into force. In some of the orders, it was stipulated that excise duty will be paid as per rules at the time of delivery with documentary evidence and VAT shall be paid based on documentary evidence after taking into account input credit. In some of the purchase orders it was not thus stipulated, though they were issued by the very same officer. It appears, the petitioner was simultaneously supplying Pre Stressed Concrete Poles in other regions of the State also and VAT was paid extra as per rules in force at the time of delivery. In Palakkad Circle, in the case of some additional WPC No.11905/2010 4 purchase orders, VAT was paid based on documentary evidence after taking into account the input credit, but in some cases it was not paid. It is stated that towards value added tax paid in respect of the supply of 14,300 seven metre poles, 8,800 eight metre poles and 8,140 nine metre poles, the petitioner is entitled to receive from the Electricity Board the sum of Rs.23,24,249/- being the difference in the amount of tax paid by the petitioner under the Kerala Value Added Tax Act, 2003 at 12.5% and the amount reimbursed by the Board namely sales tax @ 4.6% including additional sales tax.
4. The instant writ petition is filed for an order directing respondents 2 to 4 to comply with section 30 of the Kerala Value Added Tax Act, 2003 by paying to the petitioner, Value Added Tax for the assessment years 2005-2006 and 2006-2007 at the rate mentioned in section 6(1)(d) of the Kerala Value Added Tax Act in respect of the sale and purchase of PSC poles together with interest. Relying on Exts.P18 and P19 produced along with the writ petition, it is contended that the petitioner has already paid tax at the rate of 12.5% in terms of G.O.(P)No.4/06/TD dated 21.1.2006. It is also contended that as the petitioner had supplied more than 25% of the originally agreed quantity under different purchase orders, the petitioner is entitled to claim from the Kerala State Electricity Board WPC No.11905/2010 5 the difference in the amount of tax paid under the Kerala Value Added Tax Act, 2003.
5. The stand taken by the Electricity Board in its counter affidavit is that in clause 24 of Part II of tender No.Ele.6/2004-05 dated 8.6.2004, it was stipulated that the prices quoted shall indicate all duties, taxes, freight & Insurance and unloading charges etc., which may become payable by the contractor under existing or future laws or rules of the country of origin or supply during the course of execution of the contract and that the supplier was bound to quote all inclusive firm rate. Relying on Ext.R3(b), the offer made by the petitioner, it is contended that the petitioner's rate was inclusive of excise duty and sales tax and therefore the petitioner cannot seek escalation of price for the reason that in the tender dated 8.6.2004 it was stipulated that the price quoted shall be firm and no price escalation on any account will be considered during the period of supply. Relying on Ext.R3(d) it is stated that wherever it was stipulated in the additional purchase orders that VAT shall be paid based on documentary evidence after taking into account input credit, VAT was paid and in the absence of such a stipulation, the Board is not bound to pay the difference in the tax paid by the supplier. Relying on Ext.R3(d) Board order dated 10.6.2005, which was issued after the Kerala Value Added Tax Act, WPC No.11905/2010 6 2003 was enacted and brought into force, it is contended that the applicability of the provisions of the Kerala Value Added Tax Act in respect of supply as per ongoing contracts entered into prior to 3.3.2005 will be dealt with case by case and that the Board has taken the stand that it need not reimburse any additional amount towards Sales Tax/VAT in excess of the amount mentioned in the supply order.
6. I heard Dr.K.B.Mohamedkutty, learned Senior Advocate appearing for the petitioner, Sri.Manoj P.Kunjachan, learned Senior Government Pleader appearing for the first respondent and Sri.P.Santhalingam, learned Senior Advocate appearing for the Kerala State Electricity Board. It is evident from the pleadings and the materials on record that the claim made by the petitioner does not relate to the supply of PSC poles originally agreed to be supplied, but to the additional quantity of poles supplied by the petitioner in terms of paragraph 19 of Ext.R3(a) purchase order. Paragraph 19 of Ext.R3(a) purchase order reads as follows:
"19. The supplier shall be prepared to supply an additional quantity up to 25% of the total ordered quantity at the same rates terms and conditions, if called upon to do so.'
7. It is not in dispute that tender notification dated 8.6.2004 was issued for the supply of 12950 numbers of 7mtr poles, 11100 numbers of 8mtr poles and 1500 numbers of 9mtr poles. The WPC No.11905/2010 7 additional purchase orders in relation to which the dispute raised in this writ petition relates far exceed 25% of the original quantity in respect of which tenders were invited. Ext.P9 tabulation statement prepared by the petitioner discloses that in addition to the original quantity of 12950 numbers of 7mtr poles, the petitioner had supplied 14300 poles, as against the originally agreed quantity of 11100 numbers of 8mtr poles, it had supplied an additional quantity of 8800 poles and as against the originally agreed quantity of 1500 numbers of 9mtr poles, the petitioner had supplied 8140 poles. On the terms of paragraph 19 of Ext.R3(a) purchase order, based on which the additional purchase orders were issued, the petitioner was bound to supply only up to 25% of the total ordered quantity at the same rates and conditions, if called upon to do so. The Board has not denied or disputed the fact that the petitioner has in addition to the quantity agreed upon, supplied 14300 numbers of 7mtr poles, 8800 numbers of 8mtr poles and 8140 numbers of 9mtr poles. These quantities far exceed the 25% additional quantity stipulated in paragraph 19 of Ext.R3(a) which alone the petitioner was bound to supply at the original rate. The additional purchase orders were issued after the Kerala Value Added Tax Act, 2003 was enacted and brought into force and at a time when G.O.(P)No.4/06/TD dated 21.1.2006 was in force. WPC No.11905/2010 8 Even in respect of some of the additional purchase orders issued, the third respondent had stipulated that VAT shall be paid extra based on documentary evidence after taking into account the input credit. But in respect of the aforesaid additional quantities such a stipulation was not incorporated in the purchase orders though it was issued by the very same officer during the period from 1.4.2005 to 25.10.2006. In such circumstances, as the very same officer had adopted different standards when he placed additional purchase orders and the quantity supplied under the additional purchase orders far exceed the additional quantity mentioned in paragraph 19 of Ext.R3(a), I am of the opinion that the Electricity Board should consider the grievance voiced by the petitioner in this writ petition and take an appropriate decision in the matter having regard to the fact that in other circles wherein also the petitioner had supplied PSC poles and even in Palakkad Circle itself, after the Kerala Value Added Tax, 2003 was enacted and brought into force, the petitioner was reimbursed the difference in the tax already paid by it to the Government.
I accordingly dispose of the writ petition with the direction that in the event of the petitioner filing an appropriate representation before the Secretary of the Kerala State Electricity Board, the Secretary shall place it before the Full Board which shall take an appropriate decision WPC No.11905/2010 9 in the matter within two months from the date on which a representation as directed above is filed before the Secretary of the Board. The Board shall after a decision is taken in the matter communicate a copy thereof to the petitioner forthwith. The contentions of the petitioner on the merits are kept open. The parties shall bear their respective costs.
P.N.RAVINDRAN, (JUDGE) vps WPC No.11905/2010 10 WPC No.11905/2010 11